Earnings Call Transcript - LFST Q4 2021

Operator, Operator

Good day and thank you for standing by. Welcome to the LifeStance Health Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised, today's conference call is being recorded. I would now like to hand the conference over to your host today, Monica Prokocki, Vice President of Investor Relations. Please go ahead.

Monica Prokocki, Vice President of Investor Relations

Good afternoon, everyone, and welcome to LifeStance Health's Fourth Quarter 2021 Earnings Call. I'm Monica Prokocki, Vice President of Investor Relations. Joining me today are Mike Lester, Chief Executive Officer; Mike Bruff, Chief Financial Officer; and Danish Qureshi, Chief Growth Officer. We issued the earnings release and presentation after the market closed today. Both are available on the Investor Relations section of our website at investor.lifestance.com. In addition, a replay of this conference call will be available following the call. Before turning the call 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. Those statements involve risks, uncertainties and other factors, including the possible future impact of the COVID-19 pandemic on our business that could cause actual results to differ materially. In addition, please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate comparison of prior 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 prior year comparative period. At this time, I'll turn the call over to Mike Lester, CEO of LifeStance. Mike?

Mike Lester, CEO

Thank you, Monica. Good afternoon, everyone, and thank you for joining us today. I want to start by covering our performance and our outlook upfront. 2021 was a milestone year for LifeStance as we made the transition from a private to a public company. We delivered revenue of $668 million and positive adjusted EBITDA of $49 million. We grew our clinician base to 4,790 and had a net addition of 1,693 clinicians in the year. We demonstrated strong performance and are well positioned as we continue to build the nation's leading outpatient mental health platform. We grew our revenue by over 75% in 2021, which we're incredibly proud of. For 2022, we are reaffirming our preliminary outlook of revenue growth rates in the low 30s for the year, with adjusted EBITDA dollar growth rate on pace with or slightly greater than revenue. We expect full-year revenue to be in the range of $865 million to $885 million and a positive adjusted EBITDA in the range of $63 million to $67 million. Our unique hybrid model provides competitive advantages in meeting patient and clinician needs as well as operational flexibility. While we believe the long-term mix of virtual versus in-person visits will be around 50-50, our mix of telehealth visits is currently over 80%. Therefore, we plan to strategically moderate our de novo center openings in the second half of 2022 to improve profitability. Given the flexibility of our hybrid model, we can flex the pace of physical location expansion based on current and projected patient and clinician demand for in-person visits while continuing to aggressively grow our total clinician base, which is the primary driver of revenue growth. LifeStance is uniquely positioned to support patients both in-person and virtually, and we believe that this is a significant advantage for our patients, for our clinicians and for our shareholders. Our 2022 guidance reflects our continued confidence in our ability to execute on our profitable growth strategy, significantly expand our clinician population and deliver best-in-class patient mental health services. Mike Bruff will go into more detail about our financial performance and outlook in his section. Turning to the market. As our country is in the middle of a significant mental health crisis, our work has never been more needed or more critical. At LifeStance, we remain deeply committed to our company vision of a truly healthy society for mental and physical health care unified to make lives better. Similarly, as many of you heard, the President highlighted in his state of the union last week, the nation's imperative to get all Americans the mental health services they need and achieve full parity between physical and mental health care. Demand for our services remains at record levels nationwide and continues to grow. Today, there are over 50 million Americans who require mental health services; one in five adults and one in six children have a mental health issue, and untreated mental health creates a significant burden on patient health and the entire health system. This represents a total addressable market of over $100 billion growing at double-digit rates to over $200 billion by 2025. LifeStance operates what we believe is the largest provider of outpatient mental health services in the country, yet we currently represent only 1% of that large and growing total addressable market, demonstrating a long runway of growth and white space. While there are many players in the mental health care market, LifeStance is differentiated by our profitable hybrid model of care, meeting patients where they are, whether in-person or via telehealth when they need it most. According to a recent survey of nearly 8,000 patients conducted by Rock Health and the Stanford University School of Medicine, 75% of patients prefer in-person mental health visits, and 25% preferred telehealth visits. Patients seeking mental health care want to build a close relationship with their provider, and for many, that connection is developed by meeting face-to-face. While telehealth has played an important role during the pandemic, our ability to support our patients both at home and in our physical locations has solidified our position as a mental health care leader providing high-quality care across multiple care settings. Combined with the fact that we've negotiated telehealth rate parity in the majority of our payer contracts, LifeStance has an unparalleled ability to seamlessly transition both business and individual patient care back and forth between in-person and virtual settings. When COVID first emerged in 2020, our patient visits moved from 5% virtual to over 90% virtual within weeks. Through 2021, our telehealth mix trended downward to the low 80s, and we expect that mix to be approximately 50-50 virtual versus in-person over the long term. We have found that our clinicians having a personal and meaningful connection with our patients makes a tremendous difference. We are confident that our hybrid model is the future of mental health care delivery, and we are well positioned to win in this space. Regardless of the COVID environment and patient and clinician preferences, we can seamlessly transition with our hybrid model and provide a mix of in-person and virtual visits to provide patients the very best care. Turning to the labor market dynamics. 2021 has seen a record number of resignations across all industries in the country, especially in the health care industry. Even in this environment, we have demonstrated that LifeStance is positioned as a best-in-class employer with a culture, value proposition, and technology to attract and retain clinicians. We've continued to experience significant rates of clinician growth, which powers our growth engine, and retention has continued to be stable. As an example of our focus on continuing to build a destination of choice for clinicians, LifeStance was recently recognized as a Great Place to Work based on direct employee feedback. When asked what makes LifeStance a great place to work, our team members most valued our flexibility, caring people, management, support staff, and inclusion. We were honored to be recognized by the global authority on workplace culture, employee experience, and leadership behaviors and intend to continue making improvements to build quality experience for our clinicians and all employees. Our employees are deeply compassionate, dedicated advocates for mental health and overall well-being. Over the last year, we've implemented a number of initiatives to support our employees' health and well-being, including improving communication channels, developing a long-term equity incentive program that includes our clinicians, enhancing medical benefits and wellness plans, offering peer-to-peer support, and developing a robust national diversity, equity and inclusion network. At LifeStance, over 70% of our clinicians, 50% of our executive leadership team, and 40% of our Board of Directors are diverse by gender or race and ethnicity. Another attribute of happiness and well-being is participation in the community and giving back. In support of this and further increase in access to affordable mental health care, LifeStance endowed the LifeStance Health Foundation in June of 2021. The foundation was developed to award grants and scholarships to support organizations that share our mission with a focus on especially vulnerable patients, including youth and adolescents, underrepresented minority communities, and the underemployed and uninsured. To date, the LifeStance Health Foundation has awarded more than $400,000 to both national and regional nonprofits working to destigmatize access to mental health care, including the Mental Health Coalition and the U.S. Olympic and Paralympic Foundation. We are very proud to support our employees and their commitment to our mission, which improves the health and well-being of patients across the communities we serve. While world events over the last few years have destigmatized mental health in important ways, our clinicians and team members chose a career in mental health long before it was in the spotlight. Their compassion, expertise, and advocacy are making a difference. Our company values of delivering compassion, building relationships, and celebrating differences underlie everything we do on a daily basis, and we believe will allow us to continue to attract the best talent nationwide. Turning to the payer environment. Our payer partnerships are critical to our success in improving patient access. In the highly fragmented mental health space, our scale is unmatched as we provide payers with thousands of clinicians working within a single integrated organization to deliver mental health care to their broad membership base in a low-cost outpatient care setting. Providing in-network care for patients, where the alternatives are largely cash pay or out-of-network options with limited patient affordability, combined with the depth, breadth, and geographic reach of our payer partnerships, is a key competitive advantage for LifeStance. Success with our payer partners speaks for itself. Since 2017, we've grown to over 250 national and regional payer relationships and have never lost a payer contract. Approximately 90% of our business is in-network reimbursed by commercial insurers. We are differentiated in providing in-network care and improving access and affordability for patients. Turning back to execution. Our strong results in 2021 show that both our growth strategy and business model are working. We are revolutionizing how patients receive easy access to affordable mental health care. To deliver on that goal, we continue to focus on our three growth strategies on three core pillars: first, expand into new markets; second, build market density; and third, deploy our tech-enabled services. In 2021, we delivered strong progress against each of these pillars. First, in terms of expanding into new markets. 2021 represented another banner year of geographic expansion. In the fourth quarter, we expanded into Rhode Island, our sixth new state entry for the year, bringing our nationwide total to 32 states served. Each new state brings us access to a greater pool of clinicians, the ability to reach patients with our hybrid model in new markets, and contributes to delivering on our mission of improving access. Long term, we remain committed to delivering care to all 50 states through either in-person or virtual care, and we won't stop until every person in the U.S. is one click or call away from a LifeStance health clinician. Second, in terms of building market density, clinicians remain our primary growth driver. And in 2021, we grew our clinician base nationwide. We added 415 net clinicians in the fourth quarter, bringing our total to 4,790, an increase of 1,693 or approximately 55% year-over-year. This strong growth, especially in the current labor market environment, demonstrates that our value proposition is resonating as we continue tremendous net clinician growth quarter after quarter. When we founded LifeStance, creating a new model for mental health clinicians was a central foundation of our mission. To achieve this, we set out to solve key clinician pain points, which we call our six points of value, including a mission-driven culture, collegial and collaborative environment, strong work-life balance, enhanced digital tools, robust support services, and competitive compensation. Most recently, in Q4 of 2021, we announced the addition of a seventh point of value, which is creating an ownership mentality among our clinicians by including them in our employee long-term equity incentive program. Our clinician growth was driven by our organic recruiting engine as well as our practice acquisition engine, with 24 acquisitions closed in 2021 or seven in the fourth quarter. In 2021, we also opened 106 new de novo centers or 14 in the fourth quarter to bolster our physical presence in addition to our virtual service offering. In total, we now have over 500 centers nationwide. Growing our clinician base supports our mission of improving access to affordable high-quality mental health care. In 2021, we cared for over 570,000 unique patients versus 357,000 in 2020, representing growth of approximately 60%. And we grew visit volume. Last year, we reported 2.29 million visits for 2020, which excluded approximately 240,000 visits from pre-integrated acquisitions, for a total of 2.53 million visits. For 2021, visit volume grew to 4.57 million, including approximately 530,000 visits from pre-integrated acquisitions. This represents growth of over 80% year-over-year. Going forward, we will continue to provide the total volume of visits on an annual basis. Third, in terms of deploying our tech-enabled services. As we announced earlier this year, we are rolling out a new improved matching, booking and intake experience for new patients to better set up our patients and clinicians for success in that first visit. This new interface has been designed by our in-house experts with strong tech backgrounds. Improving the match between patient and clinician from the very start and seamlessly collecting necessary patient information upfront leads to higher satisfaction for both. Patients can more easily find the right care while clinicians can better prepare for the first visit. Based on our earlier experience, the reception has been extremely positive, and we have seen a reduction in the number of cancellations and rebookings related to clinician-patient matching. This enhancement will be rolled out state by state throughout 2022 and into early 2023, as well as receive additional product improvements over time as we continue to invest in innovation around the booking experience for our patients. Additionally, we're in the process of designing similar user-friendly tools for our customer care teams to make their workflows more efficient while offering an improved patient experience over the phone. This investment will allow us to deliver a consistent and unified patient experience, both on and offline. Looking beyond our three core growth pillars, we remain excited about our next growth horizon of integrated care models, including value-based care. We currently have over 10 partnership programs in place, including Medicare Advantage plans, large dialysis providers, and others. So this is not just a goal; we are innovating in this space today and are at the forefront of integrated care in the mental health industry. LifeStance is truly cutting edge in this space. While we expect it will take several years for the market to build the capabilities to fully support integrated care, we believe it is critical to maximizing the impact that mental health care can have in improving outcomes and reducing overall medical costs for Americans. While we lead the industry in these new models of care, it is important to understand that the runway and growth opportunity we have in our core outpatient market is enormous, with significant white space left to capture. We are laser-focused on executing against that core market opportunity and maintaining our strong focus on growth and profitability. Over the last year, we delivered on the three pillars of our growth strategy. We've also deepened our focus on the patient, working to expand access and improve the end-to-end experience through tech-enabled services and creating future growth options through integrated care model programs. In closing, we're starting 2022 with strong momentum following our third consecutive quarter of strong profitable growth as a public company. I'm confident in our future and our ability to help our people on their path to better mental health care. Now I'll turn it over to Mike Bruff, Chief Financial Officer, to provide more detail on our financial performance and outlook.

Mike Bruff, CFO

Thanks, Mike. Today and going forward, I will frame my comments in the context of our long-term growth strategy, which includes balancing growth, profitability, and liquidity. Let me start with growth. LifeStance continued to deliver solid growth in the fourth quarter with revenue of $190 million, up 61% year-over-year. This included an estimated impact of approximately $1 million to $2 million from an uptick in patient and clinician cancellations in late December caused by the Omicron COVID variant. For the full year, we delivered revenue of $668 million, up 77% year-over-year. Turning to profitability. In the fourth quarter, Center Margin of $54 million increased 39% over the same period last year, driven by strong revenue growth. Full-year Center Margin of $202 million grew 69% year-over-year. We generated adjusted EBITDA of $11 million in the fourth quarter or 6% of revenue. For the full year, adjusted EBITDA was $49 million or 7.4% of revenue, slightly down year-over-year, driven by strong clinician and revenue growth offset by the impact from a shift in labor market dynamics and investments in future growth and scalable infrastructure. Turning to liquidity. LifeStance continues to be supported by a strong balance sheet. We exited the year with cash of $148 million and debt of $157 million. Additionally, the Company ended the year with an undrawn revolver of $20 million. We have no material debt payments due until 2026. In 2021, we generated $9 million of cash from operations, including IPO-related payments and interest payments on long-term debt. Turning to 2022 guidance. We expect another year of strong profitable growth, with revenue of $865 million to $885 million, Center Margin of $240 million to $255 million, and adjusted EBITDA of $63 million to $67 million. For the first quarter, we expect revenue of $195 million to $200 million, Center Margin of $50 million to $54 million, and adjusted EBITDA of $7 million to $10 million. This guidance includes approximately $3 million to $7 million in revenue impact from Omicron. We expect improvements in profitability in the second half of 2022 based on the resolution of the Omicron impact in the first quarter, continued growth in our clinician base, and leverage in the second half of the year driven by our strategic decision to moderate de novo center openings as well as scaling in G&A costs. Our planning assumptions include 80 to 90 de novo center openings this year, heavily weighted toward the first half with 70 to 75 openings. M&A spend of $50 million to $70 million and no further COVID-related impacts or changes in the current labor market environment. Additionally, we expect stock-based compensation expense of approximately $190 million in 2022, including approximately $30 million from new 2022 grants. We expect stock-based compensation expense to continue to decrease as the pre-IPO awards vest. To summarize, we remain focused on delivering long-term growth by balancing growth, profitability, and liquidity.

Mike Lester, CEO

Thank you, Mike. Before we transition to the Q&A portion of the call, I hope you've already taken away the strong sense of confidence I and my team have in the growth potential of this company. So here's what you can expect from us: that we will deliver strong, sustainable growth and profitability, coupled with strategic and disciplined capital deployment and continued investment and focus on a sustainable business and employee development and well-being, which is our pathway to our top line and bottom line goals over time. My confidence in our potential is shaped by our strong performance in 2021 that we are carrying into 2022, supported by a highly differentiated, profitable hybrid platform, strong market demand, and digital innovation that is driving patient and clinician preference for LifeStance. As we enter 2022, I have significant confidence in our ability to execute upon our objectives, and I'm excited about our next growth horizons. Our ability to positively impact the lives and mental health of the millions of people nationwide that are in need of our services is unparalleled. That drive is what motivates each of our over 6,500 team members every day as we execute on our mission of helping people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental health care. Mike, Danish, and I will now take your questions.

Operator, Operator

And our first question comes from the line of Ricky Goldwasser with Morgan Stanley.

Rivka Goldwasser, Analyst

Yes. So a couple of questions here. First of all, Mike, in the prepared comments, you talked about sort of the current mix being 80-20 remote versus in-person and sort of long term stabilizing around 50-50. So when you think about sort of your infrastructure, the center infrastructure, when you're slowing down the opening of the de novo centers. But how do you think about sort of the total number of centers? And are you also thinking of potentially, over time, closing some of the existing centers to really kind of like be in line with that kind of demand-supply balance that you see over the long term?

Mike Lester, CEO

Sure. Thank you, Ricky. We don't have any intention of closing any centers. Brick-and-mortar is still important to us. We quoted a study that 75% of patients want to be seen in person. So we think that remains very important. But if you just do the simple math, if we're correct on this 50-50 assumption that that's going to be the mix, mathematically, we could double the number of clinicians today that we have and not open up a single new center. We're going to continue to open centers, but we just feel like we can modulate that and as we've stated a couple of times, we remain focused on profitability, while at the same time, it has zero impact. I mean the number of centers has zero impact on our ability to grow. It's all about the number of clinicians and the conversion to - the big conversion over the last two years to telemedicine has enabled us to do that. And again, we're agnostic because we have rate parity.

Rivka Goldwasser, Analyst

Okay. And then when we think about sort of the clinicians, I know you touched a little bit about that, but maybe if you can give us a little bit more color on what you're seeing out there in the hiring environment and also a lot of focus, a lot of questions that we're getting about sort of wage inflation?

Mike Lester, CEO

Sure. Danish, can you discuss the clinician hiring environment, and perhaps Mike can address wage inflation?

Danish Qureshi, Chief Growth Officer

Sure. Happy to. This is Danish. So on the clinician environment, our ability to continue to attract a net growth of new clinician adds every quarter. We see the environment to continue to be very favorable. For LifeStance, our six, now seven points of value continue to resonate in the market in both our ability to attract clinicians through organic recruiting engine as well as our ability to identify practices for acquisition through our M&A team. So we feel highly confident in our ability to, again, attract clinicians through either one of those levers. And then in terms of wage inflation, we continue to see wage inflation as we always have, which is that our clinicians have remained in high demand over the years and continue to be in very high demand. We continue to plan for merit increases every year in line with what we believe the market to be. And all those increases remain as part of our current planning assumptions and what we provided in our ranges.

Rivka Goldwasser, Analyst

Okay. And just one last question. Can you just give us an update on the retention rates? You guided back in the third quarter, I think it was for 80%. So how should we think about 2022?

Mike Lester, CEO

Sure. So retention is stable, and we are using the same planning assumptions for 2022 as we did on the back half of 2021.

Operator, Operator

And our next question comes from the line of Lisa Gill with JPMorgan.

Lisa Gill, Analyst

Mike Lester, I just want to go back to your comments as you talked about telehealth versus in-person. And you talked about 70% of the demand being in-person, but your thought is that you're going to get back to 50-50. My first question would be what were your expectations pre-COVID? And as we think about getting back to that 50-50 versus, say, 70-30, where there's the demand from the patient to be in-person, is that driven based on the clinician's preference to not be in person? How do I think about that?

Mike Lester, CEO

Sure. The study quoted a 75% figure, which was based on an 8,000-patient analysis conducted by Stanford. It indicated that 75% of patients prefer in-person visits with their mental health clinician. Prior to the pandemic, less than 5% of our visits were virtual, but that surged to 90% within a few weeks and has now decreased to the low 80s, largely due to Omicron. I expect this trend to continue downward for the rest of the year. For us, and considering mental health as a specialty, telemedicine is more suitable than, for example, visiting a dermatologist or cardiologist. Other specialties may not reach even 50%, but we believe a 50-50 mix works best for us, particularly from a patient care standpoint. At this point, it's a collaborative decision between the clinician and patient on whether they prefer an in-person or virtual consultation. Patients, initially forced into virtual visits by the pandemic, expressed that while they find them convenient, they don't wish to rely solely on them. Clinicians have also noticed unique insights during home visits that wouldn’t typically be observed, although these visits still don't equate to in-person consultations. Therefore, we believe this balance is appropriate.

Lisa Gill, Analyst

And then my second question would just really be around clinician adds. You talked about seven acquisitions in the quarter. Can you talk about the number of clinicians that were added via an acquisition? And then secondly, talk about retention of those via an acquisition and what the steps are to get to productivity? Is it different between an acquisition and just outright hiring a clinician?

Mike Lester, CEO

Yes, we haven't observed any difference in retention from both acquisitions and new hires. We've analyzed the data from various angles, and the results are consistent across the board. We aren't losing more clinicians in acquired businesses compared to those we've hired. It's all equal. Mike, would you like to add something?

Mike Bruff, CFO

Yes. And Lisa, what I would say, you asked about the mix of clinicians added organically versus acquired, and that's not something that we are going to disclose. But I do think it's worth noting that in 2020 and in 2021, greater than half of our growth clinician adds have come from the organic recruiting side. And that's been something that we've been trending in that direction, and it's something that we expect. And hopefully, it was noted within some of the assumptions around our guidance that we intend to allocate $50 million to $70 million towards M&A in 2022, which is back to what we would consider a normal pace versus what was elevated in 2020 and 2021.

Operator, Operator

And our next question comes from the line of Ryan Daniels with William Blair.

Nick Spiekhout, Analyst

Nick, speaking on for Ryan. I guess to start, could you guys talk a little bit about clinicians productivity and how that's sort of progressing versus your expectations as you're bringing on these newer, a little bit less productive clinicians and training them and getting them kind of up to standard?

Mike Lester, CEO

Mike, do you want to take that?

Mike Bruff, CFO

Yes, certainly. From the perspective of individual clinician productivity, we haven't made any changes to our previous models regarding ramp rates or the number of visits per clinician type. Those metrics remain largely the same. However, we did notice a decline in clinician productivity when the labor market changed in the middle of last year. This is evident when looking at the revenue generated per average clinician on a quarterly basis, which has decreased by about $1,000 in both the third and fourth quarters compared to the earlier part of the year. Nonetheless, the unit economics for an individual clinician have not significantly altered.

Nick Spiekhout, Analyst

Okay. You have discussed the COVID-related fatigue and challenges that many of your clinicians are experiencing, which is one of the reasons some are leaving. I'm curious if you have noticed any improvement in that area as the quarter progresses or as the year continues.

Mike Lester, CEO

I would say that things are stable. Anecdotally, we think it's getting slightly better, I would say. I'm not sure what inflation is going to do to the workforce, but you have to think that people would want to ensure that they have income necessary to keep up with the rising cost. So I would say, anecdotally, it's about the same or maybe slightly improved.

Mike Bruff, CFO

And we haven't made any changes in our planning assumptions relative to the assumptions that we had in the back half. And that was one of the things that we called out on the third quarter earnings call is that we were going to go ahead and make that assumption. And with what we've seen between then and now, I think that assumption is very stable as well.

Operator, Operator

And our next question comes from the line of Kevin Caliendo with UBS.

Kevin Caliendo, Analyst

Looking at the guidance, our Center Margin appears to be lower than we expected. The EBITDA aligns more closely with our projections. Is there anything beyond the slowdown in Center growth that could be influencing this? Should we be considering any factors related to the mix?

Mike Bruff, CFO

I just want to clarify, this is Mike Bruff. Apologies, Kevin, you may need to go on mute as your audio is a bit unclear. I will answer this from two perspectives: the first quarter and the full year. From a full year perspective, the only impact we've observed compared to previous models is related to the labor market dynamics affecting the overall clinician base. There is an additional impact in the first quarter. Typically in the first quarter, we see normal pressure on Center Margin due to payroll taxes, which tends to have a one-point negative impact when moving from the fourth quarter to the first quarter, as seen in past years. That's a standard planning assumption. Throughout the first quarter, we will continue to open the centers we had planned a year in advance, which adds fixed costs to our Center Margins. However, we generally plan for clinician and visit growth, which positively influences the Center Margin rate. The additional factor affecting those normal assumptions is the Omicron impact on visit growth, which we believe is limited to the first quarter. We estimate this impact to be between $3 million and $7 million in revenue, which will add pressure to Center Margins. Nevertheless, we believe this effect is specific to the first quarter and is reflected in our full-year guidance.

Kevin Caliendo, Analyst

Okay. That's helpful. And I apologize for being garbled before. The next question, just the stock-based comp number was a little bit bigger than expected. Is it reflective of the lower stock price? Is it reflective of maybe incentives or higher incentives for retention? And you said that you expect it to trend down over time. Can you just maybe explain why?

Mike Bruff, CFO

Sure. As we said, just to remind everybody, we're estimating stock-based expense for next year of $190 million, which is $160 million from the pre-IPO grants and $30 million from the 2022 equity awards. We do expect stock-based expense to come down year-over-year as the pre-IPO grants vest or are amortized. In terms of the value of the 2022 grants, that four-year value, of which 1/4 of that is vesting across 2022, the four-year value is very much in line with our peer group, with comparable public companies. It's been validated by our independent compensation consultant. So we feel very good about that. And we've made certain assumptions around having retention rates around that, which there's a lot of assumptions baked into that number which may play out differently over time and we'll give updates if there's something that changes. But I guess, at the end of the day, we feel like the value that we put out there over the four years for this grant is very much in line with peer groups.

Operator, Operator

And our next question comes from the line of Gary Taylor with Cowen.

Gary Taylor, Analyst

Wanted to confirm one thing. On the $50 million to $70 million of M&A for '22, that's M&A spend, right? Not dollars or revenue acquired?

Mike Bruff, CFO

Yes, that is correct.

Gary Taylor, Analyst

And how should we be modeling that spend in terms of revenue multiple, pro forma EBITDA multiple? Like where would you point us to?

Mike Bruff, CFO

I'm not going to point you anywhere. Unfortunately, that's something that we don't disclose.

Gary Taylor, Analyst

Okay. I wanted to ask about the 30% revenue growth that you're repeating. How should we consider the idea of clinicians who have been employed for over a year or centers that have been part of LifeStance for more than a year compared to new openings and contributions from acquisitions? Can you provide any insight on what drives that 30%?

Mike Bruff, CFO

We do not prioritize those breakdowns regarding same-store or de novos. De novos is not a primary focus for us. We do not view same-store as an operational metric either. Our main focus is on clinician growth and the productivity of our clinician team. As I mentioned earlier, the individual clinician productivity reflected in our guidance assumes a normal level, similar to what we've seen in the past. The only change is a higher turnover rate quarter to quarter, consistent with trends from the latter half of last year. Therefore, I encourage you to concentrate on the clinician aspect rather than attempting to analyze this by stores or centers; just focus on clinicians and their growth.

Operator, Operator

And our next question comes from the line of Jamie Perse with Goldman Sachs.

Jamie Perse, Analyst

I just wanted to go back to your expectations for clinician adds in 2022. I know you don't give that explicitly, but based on the guidance range for revenue and the experience in 2021, it looks like an implied slowdown. So I'm just wondering if you can give a little bit of color if there's anything that's changing in terms of the environment for adding clinicians? Or if that has some conservatism baked into it?

Mike Lester, CEO

Danish?

Danish Qureshi, Chief Growth Officer

Yes. So in terms of clinician growth, so we don't guide on the number of net clinicians. However, like we mentioned before, we still have very high confidence in the ability to both attract new clinicians through our organic recruiting engine as well as our ability through our Prax acquisition engine to bring on a net number of additional clinicians and feel very confident in the cadence on both the organic hiring and the inorganic acquisitions.

Jamie Perse, Analyst

Okay. So no real change versus '21 in terms of environment?

Danish Qureshi, Chief Growth Officer

No. We feel the environment going into this year we don't feel any material change for us last year.

Jamie Perse, Analyst

Okay. Great. And then just on margins, just curious if you can comment on this new growth strategy you have more focused on clinicians that will not be in-person, so to speak. What's the margin difference? It sounds like you expect a margin ramp in the second half of the year, if you can kind of give us some quantification of how you're thinking about that? Or if that's more of a 2023 event? And then relatedly, I mean, you guys said back in 2021, talked about all the investments you had planned for this year to build the infrastructure. It seems like this is an investment year. How should we think about leverage going into 2023 or just on a longer-term basis? So two margin questions probably for Mike Bruff.

Mike Bruff, CFO

Thank you for the introduction. We aimed to provide specific guidance for the first quarter because we recognize the impact of Omicron during this period. We anticipate that its effects are limited to this quarter. However, even before this, our focus has been on expanding our clinician base, which is essential for driving both revenue and profitability. We plan to continue growing our clinicians while remaining mindful of profitability, especially since we faced profitability pressures in the second half of last year due to changes in the labor market. As we prepared for 2022, we kept profitability in mind. The emergence of COVID variants like Delta and Omicron has slowed the progress towards what we expected to be a balanced mix of telehealth and in-person services, leading us to anticipate a higher proportion of telehealth in 2022 than initially expected. We are leveraging a hybrid model, which offers us significant operational flexibility concerning costs and profitability, while still prioritizing patient and clinician satisfaction and enabling growth in both clinicians and revenue. This operational flexibility allows us to adjust the pace of new center openings, which we will still pursue, but we can do so in a way that enhances profitability in the short term, positioning us well for the end of the year. We will closely monitor our progress as we balance growth, profitability, and liquidity. Regarding your inquiry about scaling G&A, we are making targeted investments in areas where we expect to achieve quicker scalability. We will continue standardizing our operating models, whether at the division or corporate level, and focus on improving back-office processes and systems. We also plan to pursue necessary digital investments in line with our current roadmap. By being disciplined and focused in the latter half of the year, we anticipate that our G&A will grow at a slower rate than our revenue, which should help us gain better leverage in our profit and loss statement.

Operator, Operator

And our final question comes from the line of Chris Neamonitis with Jefferies.

Chris Neamonitis, Analyst

Just wanted to clarify on the guidance. Can you confirm you're still using that 80% clinician retention number? I'm just kind of thinking, right, just given some of the improvement you mentioned as well as kind of the employee retention initiatives you've kind of undertaken. Is it maybe fair to think about that 80% shaking out to be more of an initial floor as you kind of trend back towards that 87%? Or do you see the 80% more of a kind of a structural rate in the business?

Mike Bruff, CFO

Yes. We've seen that annualized rate within the quarter be fairly stable through the back half of the year. And we think it's a prudent planning assumption for 2022. If something changes, we'll certainly let you know, but I think it's a very prudent planning assumption for 2022, which is the guidance that we've given.

Chris Neamonitis, Analyst

Got it. And then I guess this is my last and my other question would be, if you're seeing any changes maybe in the demand backdrop, do you feel like maybe you're gaining any incremental patient or referral share? And then maybe any color on this trajectory or maybe, I guess, the dynamics relative to patient wait times to see a clinician.

Mike Lester, CEO

Yes, the demand from patients remains very strong. We don't focus much on patient acquisition since the demand is so high. Our priority is to bring on clinicians as quickly as possible, and we are confident there are enough patients to support the clinicians we hire.

Operator, Operator

Thank you. This does conclude today's question-and-answer session. Ladies and gentlemen, this also does conclude today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.