LifeStance Health Gr Q3 2026 Earnings Call Transcript

LifeStance Health Gr (NASDAQ:LFST) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

LifeStance Health Gr reported a 25% revenue growth to $456 million in Q3 2026, with adjusted EBITDA margins of 15%.

The company raised its full-year guidance across all financial metrics due to strong performance and momentum.

LifeStance expanded its clinician base to over 8,800, supporting its scalable model and enhancing access to mental health care.

Technology advancements, including AI and digital tools, are being deployed to improve efficiency and patient access.

Geographic expansion continues with the completion of one tuck-in acquisition in Iowa and the opening of eight new centers.

Specialty services like TMS and Spravato showed positive outcomes, with plans to expand their availability.

Free cash flow was $22 million with a cash balance of $219 million and net long term debt of $256 million.

The company plans to reinvest in strategic priorities and expects continued margin expansion into 2027, despite a temporary revenue growth impact from EHR implementation.

Management highlighted strong clinician recruitment and retention strategies, along with a focus on high-quality care.

Full Transcript

OPERATOR

Thank you for standing by. My name is Van and I will be your conference operator for today. At this time I would like to welcome everyone to the LifeStance Health Gr third quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise and after the speaker’s remarks there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad.

If you would like to withdraw your question, press STAR one again. Thank you. I would now like to turn the call over to Monica Prokotsky, VP of Finance and Investors Relations. Please go ahead.

Monica Vincent Prokocki, CPA (Vice President of Finance and Investor Relations)

Thank you, Operator. Good morning everyone and welcome to LifeStance Health Gr’s third quarter 2026 earnings conference call. I’m Monica Burkotsky, Vice President of Finance and Investor Relations. Joining me today are Dave Borden, Chief Executive Officer, and Ryan McGrorty, Chief Financial Officer. We issued the earnings release and presentation before the market opened this morning. Both are available on the Investor Relations section of our website, investor.lifesance.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 comparison of current and past performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release table and presentation appendix. Unless otherwise noted, all results are compared to the comparable period in the prior year. At this time, I’ll turn the call over to Dave Borden, CEO of LifeStance Health Gr.

Dave Bourdon (Chief Executive Officer)

Thanks, Monica, and thank you all for joining us today. This was a tremendous quarter for LifeStance Health Gr with momentum across all areas of the business. For the second consecutive quarter we had revenue growth of 25% or more and adjusted EBITDA margins of 15%. We are once again raising our full year guidance across all metrics, reflecting our confidence in the trajectory of the business. Ryan will provide additional detail on our updated outlook shortly.

We continue to make great progress increasing access to high quality, affordable mental health care, growing our clinician base to more than 8,800 as the value proposition continues to resonate. Clinician productivity also remains very strong, building on last year’s improvements and underscoring the strength and the scalability of LifeStance’s model. Turning to technology, we continue to deploy digital tools, AI capabilities and workflow automation to improve patient access, enhance the clinician experience and drive greater efficiency across the organization. Regarding the EHR, we are making progress in preparing for the transition to the new vendor which will occur throughout next year. We are advancing readiness efforts through workflow improvement and change management planning, positioning us for a successful phased rollout while minimizing disruption to clinicians and patients.

In regards to geographic expansion, we remain excited about the significant opportunity to increase density in existing markets while also expanding into new geographies. Tuck-in acquisitions remain our preferred approach for entering new geographies supported by a strong pipeline of opportunities. During the third quarter we completed one tuck-in acquisition which expanded our physical footprint into the state of Iowa. In addition, we are leveraging our proven de novo model to enter new markets and increase density in existing markets, with the opening of eight new centers in the quarter and 20 year to date.

I’d also like to provide an update on our clinical excellence journey. Delivering high quality care and improving patient outcomes remains central to our mission and is a key differentiator for LifeStance. We recently published new outcomes data highlighting the positive impact of our growing specialty services offering for patients with treatment-resistant depression. As a reminder, these are some of the highest acuity patients we serve, as they have not responded successfully to other treatments before receiving TMS or Spravato.

For Spravato, 74% of the patients experienced a clinically meaningful reduction in depression severity after 12 weeks of treatment, and for TMS, 61% experienced a clinically meaningful reduction after completing at least 30 treatment sessions. We also saw improvements in suicidal ideation across both services. These results reinforce our excitement around specialty services and the opportunity we see to broaden their reach across our platform, as they can be truly life changing for our highest acuity patients.

During the quarter we added TMS at five additional sites and Spravato at four, bringing our total footprint to 37 centers offering TMS and 25 with Spravato. We will remain disciplined in the rollout of these services to meet patient demand while maintaining a high standard of clinical care. This has been an exceptional year for LifeStance and I am incredibly proud of what our team has accomplished. As we strengthen the core business, expand capabilities and extend patient reach, we believe we are better positioned than ever to deliver excellent care at scale and create sustainable long term value. The momentum we are seeing across the business reinforces our conviction in the strategy and the significant opportunity ahead. With that, I’ll turn it over to Ryan to provide additional commentary on our financial performance and outlook.

Ryan McGroarty (Chief Financial Officer)

Thanks, Dave. I am pleased with the team’s excellent operational and financial performance in the third quarter. For the quarter, revenue grew 25% to $456 million. Revenue surpassed our expectations, reflecting strength in both visit volumes and total revenue per visit. Visit volumes of 2.7 million increased 17%. The outperformance was driven by a combination of higher productivity and net clinician adds. Total revenue per visit of $170 increased 7% and was better than anticipated, primarily driven by payer rate increases.

Our visits per average clinician were impressive once again, increasing 5% year over year even after strong improvements in Q3 of last year. This was supported by continued gains in early patient engagement as we focus on keeping patients connected throughout their course of care. This was achieved while at the same time adding 321 clinicians in the third quarter, bringing our total clinician base to 8,863, representing growth of 11%. Turning to profitability, center margin of $161 million in the quarter increased 38% and was 35.4% as a percentage of revenue. The outperformance was primarily driven by the revenue beat. Adjusted EBITDA increased 70% to $68 million in the quarter, representing another excellent result, with the outperformance driven by favorable revenue and center margin. This resulted in a margin as a percentage of revenue of 15%. As Dave mentioned, this is the second consecutive quarter in which we have achieved margins of 15%.

We also finished with positive net income of $22 million in the quarter, which was an improvement of $21 million from the third quarter of last year. Turning to liquidity, we generated solid free cash flow of $22 million in the quarter as compared to $17 million in the third quarter of last year. We exited the quarter with a strong balance sheet including a cash position of $219 million and net long term debt of $256 million. Notably, that cash balance is post the $25 million in share repurchases during the quarter. As a result, our net leverage is currently 0.2x and gross leverage is 1.2x.

In terms of our outlook for the full year, we are raising our revenue range by $46 million at the midpoint to $1.741 to $1.761 billion. The midpoint of the range implies a growth rate of 23% for the full year. We are also raising our center margin range by $24 million at the midpoint to $599 to $613 million and raising our adjusted EBITDA range by $21 million at the midpoint to $242 to $250 million. The midpoint of the range implies an adjusted EBITDA margin as a percentage of revenue of 14%, which is roughly 3 percentage points of margin expansion year over year.

Our updated annual guidance assumes year over year revenue growth driven primarily by higher visit volumes combined with mid single digit increases to our total revenue per visit. As a reminder, on our Q2 call, we noted that given our adjusted EBITDA outperformance so far this year, we plan to reinvest a portion of that upside during the second half of the year across several strategic priorities to support our long term growth objectives. We made progress on these investments during the third quarter and expect to continue making disciplined investments through the remainder of this year. Additionally, we continue to expect stock-based compensation of approximately $60 to $70 million this year.

For the fourth quarter we expect revenue of $446 to $466 million, center margin of $149 to $163 million and adjusted EBITDA of $56 to $64 million. Looking ahead to 2027, we remain encouraged by the momentum in the business and our long term growth algorithm remains firmly intact. As we think about next year, we see several meaningful tailwinds supporting growth including increased demand for affordable mental health care, the attractiveness of our clinician value proposition and a growing contribution from specialty services. From a headwind perspective, we expect a temporary impact from the implementation of a new EHR which we estimate will impact 2027 revenue growth by approximately 1 to 2 percentage points.

As a result, we expect revenue growth to be towards the lower end of our long term mid-teens range due to the EHR implementation. Importantly, we view the EHR impact as temporary and believe the new platform will become a meaningful unlock for sustained long term growth by improving patient access, clinician efficiency, referral pathways and the overall patient experience. Once fully implemented, we remain confident that the new EHR will allow us better interoperability and flexibility as we further scale the business.

We expect margins to keep expanding in 2027 and beyond, driven by operating leverage and disciplined execution. We believe the combination of durable revenue growth and continued margin expansion positions us to deliver sustained earnings growth over the long term. With that, I’ll turn it back to Dave for his closing comments.

Dave Bourdon (Chief Executive Officer)

Thanks, Ryan. In closing, we are incredibly proud of the progress we have made and are even more excited about what lies ahead. We believe LifeStance Health Gr is uniquely positioned to build on the momentum across our business, expand our impact and improve the standard for high quality outpatient mental health care. We remain focused on executing against the significant opportunity ahead and building an even stronger LifeStance for the future. Operator, we will now take questions.

OPERATOR

At this time I would like to remind everyone, in order to ask a question, press STAR, then the number one on your telephone keypad. We ask to please limit to one question and one follow up. Our first question comes from the line of Craig Hettenbag from Morgan Stanley. Please go ahead.

Craig Hettenbach (Equity Analyst)

Yes, and thanks for all the details. Dave, on specialty services, in the back of the papers you published last week on Provano TMS, how are you thinking about any kind of gating factors? So as you’re ramping up this business, anything to be mindful of in terms of that ramp and then how are you thinking about the business scaling over the next one or two years?

Dave Bourdon (Chief Executive Officer)

Hey, good morning Craig, it’s Dave. Thanks for the question on specialty. So first of all, just start with we’re really pleased with what we’ve seen for outcomes on these treatment-resistant depression services. As I mentioned in my prepared remarks, some of the testimonials from the patients — I mean these are truly life-changing services for them. So we’re excited to be including those and expanding those as we broaden our services across our portfolio.

From a gating perspective, how we’re rolling these out is we cluster our almost 600 centers into practice groups of three to five centers each. And then what we’re doing is we’re putting a TMS chair or a Spravato center, a Spravato site in each of those clusters. And we’re doing that, as I mentioned, with a very deliberate, thoughtful rollout so that we can support the local teams and ensure that those rollouts are successful. We’re doing that today at about a handful a quarter.

We did five TMS in the quarter and four Spravato. I would expect that that will be the pace that we will continue at for the foreseeable future. Having said that, we are monitoring the new psychedelics, new therapies that are coming out and we have the ability to move faster if that’s appropriate.

Craig Hettenbach (Equity Analyst)

Got it. And then just as my follow-up, appreciate the early look into 2027, how are you thinking about kind of de novos and capex into next year? And then on the M&A front is kind of a one to two tuck-in per quarter still the right way to think about your approach there?

Dave Bourdon (Chief Executive Officer)

Craig, it’s Dave. I’ll take that one as well. So first of all, from a de novo perspective, we’re guiding to 20 to 30 this year. I would use that as an approximation for what we’re thinking about for next year and we’ll certainly come back and update you all if that assumption should change. And then as far as M&A, we’re still in that cadence of roughly one to two a quarter and I expect that will continue throughout 2027.

Craig Hettenbach (Equity Analyst)

Got it, thanks.

OPERATOR

Our next question comes from the line of Ryan Daniels — sorry, from Jack Slevin from Jefferies. Thank you. Just go ahead. Yes, Jack, we can hear you. Oh Ryan — Ryan, we can hear you. Hello? I’m sorry for that. Mr. Jack Slevin is on the line.

Ryan Daniels (Analyst)

Guys, it’s Ryan. Is it me on the mic?

Jack Slevin (Analyst)

This is Jack here. Can you guys hear me?

Dave Bourdon (Chief Executive Officer)

Yes, Jack. Morning.

Jack Slevin (Analyst)

Awesome, morning. Morning. Congrats on the really strong results. The margin is clearly really impressive and you guys put out sort of the ’28 framework of how top line is going to move. Appreciate a little bit of the early commentary that sort of puts a conservative angle on what the EHR might impact on the top line next year. But if I just think about the margin and sort of where you sit versus some of those goals that you were trying to get to by ’28, I guess the question I want to ask is like why can’t it continue to go higher?

Or are you considering that margin expansion from this level could be sustainable? Maybe not necessarily on a quarter-to-quarter basis, but as we look out to the next couple of years, I guess it feels like you’re pacing ahead of that. Is that a fair assessment or how can you think about maybe potentially redrawing expectations around some of those targets given how strong things have been recently?

Ryan McGroarty (Chief Financial Officer)

Hey Jack, it’s Ryan. Thanks for the question. So to your point on margins, really strong profile overall. We’re extremely pleased with the momentum, and so I’ll frame it from our long-term margin expectations that you’re very clear of, which is the 15% to 20% of adjusted EBITDA on a long-term basis — but really with the 20% not representing a ceiling, to your question around. We just recently gave you the mid-teens by full year 2028 on our Q4 call, and obviously there’s a range around mid-teens as it relates to results.

We continue to invest in the business for long-term growth. We’re extremely pleased with the progress that we’ve made. But at this time we’re not going to further refine the long-term kind of growth algorithm. We obviously gave a little bit of guide for ’27 on our Q4 call. We’ll give ’27 guide on our Q4 call. Our thinking is we’ll come back at the beginning of 2028 with an updated long-term perspective. But again, I don’t want to lose sight of how pleased we are with the progression in the margins that we’ve seen.

Jack Slevin (Analyst)

Got it. Okay. That’s helpful, Ryan. I appreciate it. And then as a follow-up, maybe to just touch on that EHR point. I guess you guys have been very clear and early with the messaging around rolling that out, but maybe just if you can go a click lower on the things you’re doing now that are sort of getting you prepared to sort of minimize the impact from that next year and how you feel about positioning around that. Thanks.

Dave Bourdon (Chief Executive Officer)

Hey Jack, it’s Dave. I’ll take that. So a lot of energy being expended by the organization and with the vendor that we’re moving to and preparing. And it’s everything from standardizing and enhancing our workflows in advance of moving to the new technology to the conversion of data to the connecting of the various point solutions that will continue from the current EHR to the next EHR. There’s a lot going on. We will be testing the new solution through the remainder of the year.

And then early next year we’ll begin a very thoughtful and phased rollout where we’re going to start with one state, which is a couple hundred clinicians, and we’ll ensure that the new EHR is working as designed. We’ll make any adjustments we need to and then we will — again on a phased basis — roll that out throughout the calendar year next year, because it is no small undertaking to roll out a new EHR to over 8,800 clinicians.

Jack Slevin (Analyst)

Got it. Really helpful. Congrats again on the strong results.

Dave Bourdon (Chief Executive Officer)

Thank you.

OPERATOR

Our next question comes from the line of Ryan Daniels from William Blair. Please go ahead.

Ryan Daniels (Analyst)

We’ll try this again. Guys, can you hear me now? All right, perfect. Good morning. Congrats on the strong results. Dave, maybe a continuation of questions for you on the specialty services. Obviously, data on treatment-resistant depression was great. I’m curious if that can create more opportunity for you to go back to payers and negotiate to ensure either that you’re getting reimbursed for those services in all your markets or potentially to improve pricing or accessibility for patients to access those services.

So is that somewhat of a catalyst for you, or am I reading into that too much?

Dave Bourdon (Chief Executive Officer)

Yeah, Ryan, you’re thinking about it the right way and I appreciate how you’re approaching that. When you think about a therapy like Spravato, we’re still in relatively early days of that compared to TMS, which has been around a little bit longer. And we see a lot of variability in the reimbursement approach from payers in regards to the level of reimbursement, and even some payers not even accepting Spravato as an approved therapy. And outcomes like this enable our payer engagement team to go out and work with the payers and explain to them the benefits of a solution like that.

And it helps us either getting it included in the reimbursement schedule or getting the reimbursement level to where we believe it would be appropriate to be able to expand that service. So we’re really excited about the early read on the outcomes.

Ryan Daniels (Analyst)

Okay, perfect. And then I guess as a follow-up, Brian, one for you. I don’t know if you’ve modeled out the cadence this much of the EHR rollout, and I appreciate that that can impact productivity. But if it starts out light and then kind of increases through the year, should we expect more of the revenue growth hit in the back half of the year and into early 2028, or will it be constrained to 2027 and kind of even throughout the year? Just any thoughts on how we should initially be thinking about that impact?

Thanks for the color.

Ryan McGroarty (Chief Financial Officer)

Yeah, I appreciate, Ryan, that question. So the way I’d have you kind of think about it — first and foremost we wanted to make sure that we got out the revenue impact to the market, just in terms of our view of the 1% to 2%. The way you can think about it is a phased rollout. So the first phase is probably our smallest rollout that we have through the year, and part of that is that you’re executing against a model office to be able to implement across the rest of your portfolio.

But then it’s pretty steady, with the full implementation completed by year-end in ’27, so there is no carryover into ’28 just as it relates to the implementation timeline. And again, just kind of want to reiterate our enthusiasm for being able to implement a best-in-class EHR in totality. So the team’s really excited to get going through the implementation phase.

Ryan Daniels (Analyst)

Great, thank you.

OPERATOR

Our next question comes from the line of Kevin Caliendo from UBS. Please go ahead.

Brett (Analyst)

Hey guys, this is Brett on for Kevin. Thanks for taking my questions and congratulations on the great quarter. Just wanted to double click a little bit on that revenue per clinician. You know, obviously this year has been really strong, and I know you’re not giving formal guidance for ’27, but just kind of looking at the drivers of that. Can you just kind of break out how much of that growth we’ve seen is from productivity versus maybe Spravato contributing there, market growth, all of the above?

Just help me understand the drivers of how you’re thinking about the durability in the next year.

Ryan McGroarty (Chief Financial Officer)

Yeah, so when you think about TRPV — we’re really pleased with the 7% that we achieved in Q3, which again in Q2 we highlighted that we upped our range to mid-single digits just as it relates to overall kind of rate. When you think about what’s driving the rate you can primarily think of it from payer contracting, but there is some support as it relates to specialty contribution in totality. As you get in and you think about a good place to start as you’re thinking about 2027, each year when we go into the year, going back to thinking that the range that we think is the right range in terms of what the expectation should be is low to mid-single digits overall from a rate perspective.

Brett (Analyst)

Understood, that’s super helpful. And as a follow-up, on the specialty side with Spravato, how are you tracking versus the $70 million target that you had this year? The 40% growth — is that still on track? And again, going into next year, how should we be thinking about that contribution to growth?

Dave Bourdon (Chief Executive Officer)

Hey Brad, this is Dave. I’ll take that one. So just for grounding, all of our specialty services comprised about $50 million of revenue last year. It’s going to grow 40% this year to roughly $70 million — I think that’s the $70 million of revenue you’re referencing — and we are on track to deliver that. The majority of the $50 million from last year was neuropsych testing, which we’re the national leader in. The 40% growth — so that higher than our overall book growth rate this year in specialty services — is being driven by the TMS and the Spravato rollout, and we’re in the early stages of that.

As I mentioned earlier, this deliberate rollout of about a handful of each Spravato and TMS each quarter. And I would expect the growth rate for next year to be similar to this year, to be meaningfully above our overall book of business.

Brett (Analyst)

Great. Thanks guys. Appreciate it.

OPERATOR

Our next question comes from the line of John Pinney from Canaccord. Please go ahead.

John Pinion

Hi, John Pinion for Richard Close. Thanks for the questions and congrats on the quarter. I guess just touching on these clinician adds again, very strong. I guess it’s just like what gives you the confidence that you can continue to add at this kind of clip going forward? Is there any improvement in, I guess, clinician retention or just what are you seeing on the recruitment side?

Dave Bourdon (Chief Executive Officer)

Hey John, this is Dave. I will take that. So first of all, what we saw in the quarter, as you mentioned, a net add of 321 clinicians, strong result. We’re happy with that. What’s driving it is a consistent theme that we have seen now for quite a while, which is very strong recruiting combined with stable retention. We’re always working on the clinician value proposition and trying to enhance it and make it more attractive. So that would be a never-ending initiative for us.

And so we’re always doing that with an eye towards improving the overall retention level. Now what gives us confidence about being able to continue to do this is just a reminder. The mental health outpatient space is a highly fragmented industry. While we’re the market leader, we still have low single-digit market share of the total clinician population. So we believe we have a tremendous amount of room to run on being able to add clinicians in the future.

John Pinion

Okay, thanks for that. And then a quick follow-up for Ryan. I guess the free cash flow conversion was a little bit lower in this quarter. Is this mostly just timing and what can we expect normalized free cash flow conversion to be on a yearly basis?

Ryan McGroarty (Chief Financial Officer)

Yeah, I appreciate the question. So, as it relates to free cash flow for the quarter, I’ll take you back to the Q2 call where we kind of highlighted that we had a couple of timing impacts going into Q3, and one would be just timing of payroll, so just how payroll fell. And then two is just the annual contribution as it relates to our 401(k) plan. So those are kind of two payments that impacted Q3 when you look at free cash flow. Overall we’ve really improved the free cash flow conversion. Free cash flow can be very lumpy due to—I just went through a couple of timing impacts to it from overall working capital and timing items. And so right now we’re not guiding to how to think about the free cash flow conversion. But again, the recent past is kind of a decent indicator when you look at it on an annualized basis, again with the strong, high-quality earnings that we’re delivering.

But again, we’re not specifically guiding to that metric.

John Pinion

Gotcha. Thank you.

OPERATOR

Our next question comes from the line of David Larson from BTIG. Please go ahead.

David Larson (Analyst)

Hi. Congratulations on another very good quarter. Can you maybe just talk a little bit about your managed care contracting effort? Any sort of updates there? Are you expanding into new states? Just your thoughts on how value-based care discussions are progressing and the general sort of reimbursement views for next year. Thanks.

Dave Bourdon (Chief Executive Officer)

Hey Dave. This is Dave. I’ll take that one. There’s a few pieces there, so I’ll try to hit them all. First of all, for the overall contracting environment, obviously happy with what we’re seeing for the results this year, with our total revenue per visit up 7% year over year, which is very strong considering we always enter the year with a low to mid single-digit target. The overall payer environment, I wouldn’t point to any material change. The payers, while it appears their financial results are improving, are still under financial pressure.

At the same time they are also under pressure from their clients, their corporate clients as well as their members, around providing access to outpatient mental health care. So there’s a balance there. And then a few of them are starting to focus on quality and outcomes, which obviously we welcome that. Which goes to, I think, the third part of your question, which is around when we think about measurement-based contracting, value-based contracting—again, we have a few payers that are doing that with that focus around quality, but I would view those as the thought-leading ones. I do anticipate in the coming years that more and more payers will migrate to that. And again we welcome that. That’s what we’re all about, delivering high-quality care.

And you’re seeing that in these white papers that we’ve been publishing throughout this year on the outcomes that LifeStance Health Gr is delivering. And then the third part of your question was just expansion into new states. We’re now in 34 states, so we added a state this quarter with our tuck-in acquisition in the state of Iowa. You should expect that we will continue to do one to two tuck-ins a quarter for the foreseeable future. Some of those will be to open new states, some of those will be to enter into a new geography or a new MSA within an existing state. But we will continue to be doing that as we believe we have tremendous geographic opportunity in front of us.

David Larson (Analyst)

That’s very helpful, thanks. And then I know you talked about this a little bit earlier. The growth in providers continues to be really good. In my mind that’s really the most important metric because you got to make sure your doctors are happy on your platform because they’re driving all the volumes. Just any more color you can provide would be great. For example, do you have a chief medical officer who the doctors can collaborate with for the billing and AR when the docs go to submit the claims, or have there been any enhancements there that make their administrative and cash collections efforts a little bit easier?

I think you have nice office space. Just any color would be very helpful. Thanks.

Dave Bourdon (Chief Executive Officer)

Dave, I appreciate the question. We are continuing to make enhancements to our clinician value proposition. There’s a number of different dimensions to that. So one you mentioned was revenue cycle management. Our clinicians for the most part are not involved in that. We have a tremendous revenue cycle team. As a matter of fact, when you look at our DSO and the cash collection results, it’s one of the reasons why our free cash flow this year is strong—because of the advancements that we’ve been making in that we’ve talked about on previous calls.

We have some new AI tools and process improvements and things like that that we’ve put in in the revenue cycle. But for the most part our clinicians, they don’t have to worry about that. If they do a visit based on the service they provide, they get paid, and then LifeStance Health Gr is then on the risk to go and collect from either the patient or the provider or both, depending on the situation. So we’re doing a lot around improving our value proposition to our clinicians. One of the differentiators for us versus some practices is that we have a very strong and robust clinical leadership team. So we have both a corporate chief medical officer organization that is setting strategy and vision for the organization, and then we also within our practice operations have nearly 100 clinical leaders that are supporting all of the local sites and the clinicians.

If they need a sounding board for a case consult, or if they’re early in career and they need help in just best practices for dealing with a certain patient, or whatever the case may be, we provide a lot of clinical support to our clinicians in addition to the operational support.

David Larson (Analyst)

Very helpful. Congrats on another great quarter. Thanks.

OPERATOR

Our next call comes from the line of Sean Dodge from PMO Capital Markets. Please go ahead.

Sean Dodge (Analyst)

Good morning. Just on the Q4 guidance, so that has EBITDA—it’s kind of showing EBITDA would be down quite a bit sequentially. Ryan, I know you mentioned again some investments you’re making in the business. Are you expecting some kind of new investments or a lot of incremental investing to come through in Q4? Is there just any seasonality in costs we need to keep in mind? Just if you could kind of unpack a little bit more—just expect the kind of EBITDA cadence from Q3 to Q4.

Ryan McGroarty (Chief Financial Officer)

Yeah, Sean, I appreciate the question. And first and foremost, when you’re looking at EBITDA, I think it’s important to start off with just the overall context of the full-year guide and the growth that we did versus last year. Right. So the midpoint of our guide is $246 million on a full-year basis, so that’s growth of 56%. Specific to the fourth quarter and investments: like we highlighted in our last call just in terms of the second half of the year, we believe that we’ve earned the right to step up investment that sets us up for continued long-term success. And so the areas that I pointed to in that call are very similar to the investments that we’re seeing between Q3 and then within the guide in Q4. The areas that I highlighted were really around patient acquisition—so think about our business development team—technological solutions through AI, our clinical excellence teams.

The ability—we reported a couple different outcome studies and so we’ve made investments in that team—and then also some advancements in comp and benefits for the clinicians and center support. In addition, in Q4 what you’ll see coming through the center margin line is really an opportunity that we took to refresh some of our centers that needed it. As you recall, we have over 575 centers and so we took the opportunity to make some improvements in Q4. But overall those are the categories of investment. We still feel obviously really good about the margin profile of the business, both from what we’ve been able to do with our full-year guide—expand margins on center margin and also on the adjusted EBITDA line by approximately 300 bps.

So we really feel great about the momentum going into Q4.

Sean Dodge (Analyst)

Okay, good. And then maybe going back to the new EHR again. So you gave us the expected impact of revenue. But Dave, to your point, it sounds like there’s also going to be a lot of costs associated with the rollout too, just in terms of the data standardization, the migration—how much headcount have you added or are you going to have to add as part of that? Is that support going to be temporary? Are you going to have to run duplicate systems for a period of time?

Just anything else kind of on the cost side that you can quantify and maybe give us a timeline on the cost piece of the EHR.

Ryan McGroarty (Chief Financial Officer)

Yeah, Sean, this is Ryan again. And so overall, if you recall, in our prior calls, we kind of headlined that the expectation around EHR implementation will be roughly between $20 and $30 million, which would be either an adjustment to EBITDA or capitalized. We expect we’ll come out with more thoughts around this in our Q4 guidance call overall. And so again, we’ll continue that conversation as we get into the Q4 results for 27.

Sean Dodge (Analyst)

Okay, great. Thanks again.

OPERATOR

Our next questions come from the line of Peter Warrendorf from Barclays. Please go ahead.

Peter Warrendorf (Analyst at Barclays)

Hey, thanks for the question. I just wanted to follow up on the fourth quarter margin question from before. I understand that it’s down a little bit sequentially, but I was curious how to think about the cadence of fiscal 27 and whether some of those investments kind of bleed into next year. I guess the question is, should we think about 4Q being a reasonable starting point as we start to think about early next year?

Ryan McGroarty (Chief Financial Officer)

Yeah, I appreciate the question. This is Ryan again. And so the way I’d have you think about it. So in my prepared comments, obviously we talked about the impact of the EHR to the long-term revenue guidance and also that our intention is to continue to expand margins when we look at 27 and beyond. So I would kind of look at it more in the context of the full year, right, versus, like, me providing guidance as it relates to how to think about the calendarization at this point of the margin profile.

But again, I go back to the strength of just the margin expansion that we’ve demonstrated in 26 over 25. So we really, really like the momentum kind of heading into 27.

Peter Warrendorf (Analyst at Barclays)

Awesome. And then just a quick follow-up on the clinician retention. Obviously clinician growth has been really strong this year. You guys have already talked about that. And as we start to lay out some of the cash-pay incentives and some of those productivity initiatives that you guys have put in place, can you just give us an update on where you are relative to your retention targets, and maybe if we’ve seen retention tick up here?

Dave Bourdon (Chief Executive Officer)

Hey Peter, this is Dave. I’ll take that one. So retention has been stable. So we have not seen an uptick or downtick, no movement in either direction. It has continued to be stable. And as a result, the growth that we have seen in our net clinician numbers over the past year has been driven by the strength of the recruiting. We still believe there’s opportunity to improve the clinician retention level by 5-plus percent over the long run. And that’s what our goals are and what we’re marching towards.

Now, having said that, as we get more sophisticated in drilling into the various clinician cohorts and understanding the retention dynamics within those cohorts, what we are happy to see is that we have improved the retention of our highest-producing clinicians. The retention level for that cohort is meaningfully higher than the rest of the clinician population. And the area where we have the most work to do, which isn’t a surprise, would be our new clinicians to LifeStance Health Gr.

And that’s our area with our lowest retention levels. And so we’re, you know, focused there. We’re putting in some initiatives related to improve that. And again, but this is a never-ending process for us. We’re always going to be focused on how can we improve our clinician value proposition, how can we make it easier for them to practice, for them to be able to deliver better outcomes for the patients. And just where we are in the journey right now is what we’re talking about.

OPERATOR

Our last question comes from the line of Scott Cohenhaus from KeyBank. Please go ahead.

Scott Cohenhaus (Analyst)

Hey team, thanks for taking my question. I just wanted to ask one last question on specialty here. If Compass Pathways psilocybin drug is commercialized next year, what are your steps to getting that into your clinics as a treatment, and how should we think about that opportunity in specialty? Thank you.

Dave Bourdon (Chief Executive Officer)

This is Dave. I’ll take that. So I won’t speak to any specific new therapy. It’s still early with all of these. We’re monitoring them, and certainly the early signs are exciting as far as being able to improve patient outcomes. But there’s still regulatory, payer and reimbursement, and adoption hurdles that remain unresolved. So again, we’re monitoring, but there’s still a lot to play out. Now, having said all of that, be able to move fast if appropriate. And we’re going to be able to leverage both our current center footprint as well as the foundation that we’re building for Spravato. So we’ll be able to move fast if appropriate. But at this stage, it’s still too early to be talking about if something new would be impacting 2027.

Scott Cohenhaus (Analyst)

Understood. Thanks.

OPERATOR

There are no further questions. I will now turn the call back over to Dave Bourdon, Chief Executive Officer, for closing remarks.

Dave Bourdon (Chief Executive Officer)

Thank you. Operator, before we end, I want to say a few words to our nearly 11,000 teammates. As I reflect on everything we’ve accomplished, what stands out most is your commitment. And whether you’re caring directly for patients or supporting the teams that make that care possible, each of you plays an important role in moving LifeStance Health Gr forward. I just want to thank you for your energy, dedication, and sense of purpose you bring every day.

Mental health care has never been more essential. We’re proud of the difference LifeStance Health Gr is making today, and we remain even more committed to expanding access so we can help millions more people get the care they deserve. Operator, that will conclude our call. Thank you.

OPERATOR

Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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