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    LifeStance Health Group Inc (LFST)

    LFST Q4 2024: Margins Flat in 2025, Path to 15–20% EBITDA

    Reported on Jun 6, 2025 (Before Market Open)
    Pre-Earnings Price$7.51Last close (Feb 26, 2025)
    Post-Earnings Price$8.02Open (Feb 27, 2025)
    Price Change
    $0.51(+6.79%)
    • Strong Margin Expansion: Executives highlighted that LFST has already achieved double-digit adjusted EBITDA margins ahead of schedule and expect a return to margin expansion in 2026 with a path to 15%-20% EBITDA margins going forward, driven by improved center margins and operating leverage enhancements.
    • Resilient Clinician Model: Management noted robust clinician recruitment and stable retention—even in a competitive market—with clinician growth at 12% year-over-year and a shift towards an employed model that supports long-term stability and superior service delivery.
    • Attractive M&A Strategy: The leadership emphasized a disciplined M&A approach focused on acquiring capabilities that enhance the core business, leveraging a favorable market environment where earnings improvement, rather than just top-line multiples, is key to unlocking long-term value.
    • Flat margins in 2025: Guidance indicates margins will remain roughly flat year-over-year due to downward pressure from a unique payer's rate decreases and rising payroll tax and compensation costs.
    • Competitive clinician recruitment environment: The market remains highly competitive for recruiting and retaining clinicians, which could force higher compensation and operating costs, potentially impacting profitability.
    • Rising center-level costs: The non-recurring reduction in cost per visit seen in 2024 will not repeat in 2025 as clinician wage increases resume, putting upward pressure on overall operating costs.
    1. Margin Outlook
      Q: How are long-term margins evolving?
      A: Management expects margins to remain flat in 2025 and then improve via operating leverage to eventually reach mid- to high-teens EBITDA margins (around 15–20%) over time.

    2. EBITDA Growth
      Q: Will EBITDA growth outpace revenue?
      A: By 2026, improved center margins and G&A leverage will help EBITDA grow faster than revenue, setting a path toward 15–20% margins in coming years.

    3. Rate Outlook
      Q: Will payer rates improve in 2026?
      A: The company expects low to mid-single-digit rate increases in 2026, reverting to prior levels after recent rate decreases.

    4. M&A Environment
      Q: What is the acquisition strategy?
      A: They plan selective, tuck-in acquisitions to expand capabilities and target customer segments, focusing on the bottom line rather than top-line multiples.

    5. Cost Structure
      Q: How will cost per visit change?
      A: The cost-per-visit decline from 2024 is unlikely to continue in 2025 due to annual clinician compensation increases, despite operational efficiencies.

    6. G&A Spending
      Q: What are 2025 G&A expectations?
      A: Guidance projects quarterly G&A spending of about $77–78M, with higher payroll expenses offset by ongoing operational investments.

    7. Clinician Growth
      Q: How is clinician recruitment faring?
      A: Despite fierce competition, robust recruitment and stable retention have supported a 12% year-over-year growth in the clinician base.

    8. New Clinics
      Q: Will de novo openings remain high?
      A: Current plans for 25–30 clinics are elevated due to carryover from delayed openings, with future expansion driven by market demand rather than return-to-office trends.

    9. Clinician Model
      Q: Is the employed model gaining traction?
      A: Management favors an employed clinician model for long-term stability, even though most competitors use 1099 arrangements, strengthening their value proposition.