LifeStance Health Group, Inc. Common Stock Morgan Stanley 24th Annual Global Healthcare Conference

Good morning, everyone. I am Craig Hettenbach, lead coverage of healthcare technology and providers. Very pleased to have with us, LifeStance today, CEO Dave Bourdon. Just as a heads-up before we get started, for disclosures, you can find them on the Morgan Stanley website, www.morganstanley.com/researchdisclosures. Dave, with that out of the way, I thought we would just set the tone on just the overall outpatient mental health market. Still very fragmented. Just your positioning in this market, just as a starting point.

Yeah. First of all, thanks for having us, Craig. It is always great to be here with you. Outpatient mental health industry is unlike anything else in the healthcare ecosystem as you know it today. So highly fragmented industry. The majority of practitioners are 1099, and they are in small practices or even individual practices. You still have a good percentage of them that do not even accept insurance, so they are still cash pay only. I think you read about that, you hear that in the news of people having trouble getting access to affordable care, which means you are not able to use your health benefits. So that is the industry. Obviously, you have the increasing demand for services that we all hear about. The social stigma is reducing, which again, only puts pressure on this fragmented industry. Then you step into where LifeStance is.

We are the leader, by far the largest national practice of outpatient mental health care. We have about 8,500 W2 clinicians, about 600 centers spread across 34 states. We just added a state last week, Iowa, with an acquisition. So we have a big footprint. Still a lot of opportunity, which I am sure Craig will ask me about from a geographic perspective. But we are by far the leader in the outpatient space.

Great. One of the things we have seen accelerate through COVID and coming out is this imbalance of supply and demand between- Yeah clinicians and people that need care.

What are some things you've been able to do in terms of whether it's on the clinician front, hiring, and just kind of Yeah helping payers out?

Because this continues to come up.

Yeah. There's an interesting dynamic in outpatient mental health where it's acknowledged that there's this supply-demand imbalance, the supply of clinicians versus the patient demand, and there's an imbalance. It's only getting worse. At the same time, outpatient, because of this highly fragmented industry, it's really hard for patients to find care. So we have this imbalance, but yet every week, LifeStance has thousands of open slots that new patients could use that go unused. It's like an airplane taking off with empty seats, and that's common in the industry. So while we have the imbalance, it's a very inefficient model. Specific to LifeStance, we continue to grow our clinician base near double digits every year organically, and that's helping to improve access for the payers.

The other big thing that we do is that with our 600 centers, we're also increasing access to in-person care, and that's very important to the payers because a lot of the new entrants in the industry are really virtual only, especially since COVID. Having that in-person dynamic is really important for the payers. The last thing I'll mention is while the payers are very focused on access, they're starting to pivot towards quality, and we welcome that. This year in both our first and second quarter calls, we referenced white papers that we've put out around the high-quality results we've been achieving for our patients with depression and anxiety, as an example. You should expect more white papers coming. I think next wave will be around some of the specialty services like TMS and SPRAVATO.

We're very focused on quality, and we welcome that conversation with the payers.

Got it. The point on empty seats I think is a great segue. I did want to talk about productivity.

Yeah. You could see the numbers today.

That's one thing in terms of it's been an important driver of growth, full clinician schedules, but I know there was a lot of work that went behind that. So maybe take us back in terms of what you saw in the business, how you tried to gear it to position yourselves for full- Yeah, it's been a journey.

As you know, we started out a couple of years ago wanting to increase the capacity or the time that clinicians give us on their calendars. Because capacity and then how well we utilize it, that's what drives productivity. We were very successful in getting additional hours from clinicians. They wanted more work. Last year, we then focused on how do we better utilize that time they're giving us, and there were really two angles to it. The first was that we wanted to drive more patients in the door, new patients in the door, and we did some things. For example, we put some technology AI tools in support of our phone new patient intake team. Hundreds of people answering the phones.

That's actually how the majority of new patients book appointments with us still, but we had some AI tools that supported them. As a result, we increased the conversion of patients seeking care to booking an appointment by about 5%, which was really meaningful for us. Part of it was getting new patients in the door, and then the other aspect of it was, again, better utilizing the time clinicians gave us. This was basic practice management.