LifeStance Health Group, Inc. (LFST) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to day 3 of the UBS Healthcare Conference. I'm Kevin Caliendo, health care services analyst. And we are very happy to have the management team from LifeStance Health. With us today is: Mike Lester, Chief Executive Officer; Mike Bruff, Chief Financial Officer; and Danish Qureshi, Chief Growth Officer and now Chief Operating Officer. Congratulations.

Thank you.

Mike, do you want to?

Sure. Thank you. Appreciate you having us here today. Just high-level LifeStance, so we're the largest outpatient mental health company in the country today, providing both in-person and virtual care. We W-2 employ 5,000 clinicians across 32 states and 500 outpatient centers. So our real mission is to improve access to trusted, affordable mental health care. Appreciate everybody attending today.

Well, thank you. Thanks for coming in, appreciate it. You noted recently on the last earnings call your stable retention rates. And maybe the inflationary environment has attracted potential in places. It's actually been a net positive for you. How do you feel -- how do you see the post-pandemic workforce structurally looking? And how is this changing your long-term planning?

Sure. So we've been very pragmatic about the way we think about our retention. So we've said publicly that our retention has stabilized at 80%. That's what we continue to use for our long-range planning. I think the jury is still out whether this is a transitional change in the labor environment or whether it's going to be structural. So we're going to continue to monitor that. And I would say a potential tailwind for us is that if retention rates were to improve and the whole labor market were to start to improve and everybody comes back to work. So we feel good about where we are today. But we're being very pragmatic about that approach on a long-term basis.

And just remind us, your guidance assumes 80% remains the rate going forward?

That's correct.

You've had a chance to now -- it's been a little bit of time. Last summer was when you really started to see this for the first time. If you do a look-back, who were the kinds of people who are leaving more? Like if you were able -- I don't know if it's a geographic, if it's a demographic, any sort of insight into what you saw in terms of the increase?

Sure. As you can imagine, as a team, we've sliced and diced this everywhere you possibly can. So whether it's by clinician type, whether it's acquired versus hired, whether it's age, there -- it's incredibly consistent across any demographic that you look at, which is a little frustrating. So if it were one single thing, if it were we're losing more acquired clinicians than hard clinicians, that's something that we could go fix and focus on. But it's really equal across all demographics. And people are really -- there really is a -- we really think more of it as a compassion fatigue, pandemic fatigue, compassion fatigue, whatever you want to call it. We have clinicians that are sitting there seeing 6, 7, 8 patients a day, 5 days a week. And I've talked to a lot of the therapists out there. And anecdotally, they'll say, "I used to have a varied patient type," right, "I might see somebody that has schizophrenia in the morning and somebody that's bipolar in the afternoon." In the pandemic, it's like everybody wants to talk about the same thing. They want to talk about politics or COVID. And that just gets fatiguing. And so we've had a lot of people, they don't go across the street or they don't go to a competitor, they just leave the workforce. They go home and say, "I'm just tapped out." And hopefully, they'll return to the workforce in the long term.

It's interesting. So it almost sounds like they're becoming bartenders as opposed to therapists. It's not funny. I mean, it's really -- that's -- you become -- especially because it's so polarizing and you have -- in those cases, you tend to have your own personal opinions as opposed to a professional opinion. And that makes it more challenging. That's interesting. I hadn't heard of that.

All the patients are sitting at home quarantined, watching cable news, and there you go.

I don't watch cable news. That's a lesson for us all. As we think about what you've done to sort of reduce the churn, how you're paying employees, how you're incentivizing, can you just go back through that and how that's evolved a little bit? I think it was a question people were nervous or concerned about. Would it cost you a lot more to keep the people in place, given what happened? Can you just take us through that?

Sure. And maybe I'll let Danish -- or he's sort of the clinician whisperer at the company, so he's in charge of recruiting. We have 24 full-time in-house recruiters, so we hire a lot of clinicians every quarter. I'll let him talk about the value proposition for the clinicians.

Sure. Yes, I mean, what we continue to see is our Seven Points of Value, that we refer to as our clinician value proposition, continues to resonate in the market. We've had no challenges with our pipeline of recruiting clinicians. We also have a very strong pipeline of our M&A activity as well to be able to fill the top of the funnel. But at the basic level, our Seven Points of Value continue to resonate. We still feel firmly that we have found and identified the right pieces that are important to all clinicians. And the newest addition to that is really the seventh point, which was creating this ownership mentality through our long-term incentive plan that we've rolled out this year to our clinicians that are working on a full-time basis and meeting certain thresholds. And that's really gone over extremely well because it's taken them from, yes, you're getting all of the benefits of being employed, meaning you're getting all of the support services, you're getting insurance and benefits. But on top of it, now you get the feeling of being able to participate as an owner in the company, which is something that no one else is able to offer. So that new addition to the value proposition has really resonated well and is allowing us to both attract more clinicians as well as retain the ones that we have.

I'd love to know a little bit more about the recruiting process. I mean, there are hundreds of thousands of potential clinicians that could work for LifeStance. How do you identify them? And how do you recruit? What makes the recruitment versus an M&A target? Do you recruit from practices in? Or do you recruit from younger, from college or graduate programs? Just take us through sort of how the process works.

Sure. So when we started the company, we knew that we wanted to be the largest provider of outpatient services in the nation. And so we really made sure that we built an organic recruiting engine that was focused on appealing to all clinician types, regardless of where they're coming from, meaning straight out of training, in solo practice, in another group practice, in a hospital setting as well as regardless of what stage of their career they're in, whether it's again straight out of training, mid-career or late career, and across all provider types, psychiatrist, nurse practitioners, psychologists and therapists. And so that's exactly what we've built is an engine that looks for all of those different provider types. We don't skew to one versus the other. And we're not focused on just a single lever. And if you look at our clinician base and where they've come from, it's really an even spread across all those variables, which is both why it's sustainable and why we're able to do the volume that we are. So we're really proud again of the organic engine. On the M&A side, we're looking at practice groups that are of a specific size that have strong reputations in the marketplace already and that have a good growth trajectory for themselves that we can accelerate once they attach on to our platform and in markets that are strategically important to us to continue to grow our presence.

What are those markets that are strategically important? Is it geographic markets you're talking about?

Geographic markets, yes.

So when you establish a market, you have -- you're able to -- is it the clinicians first, then the payer relationship? Or is it payer relationship, given look at our history, look at our experience, this is what we'll be able to bring to you in terms of and then once you have the payer relationships, you're able to recruit the physicians?

Yes. So we enter all new markets. And when I describe a market, I mean a new state through acquisitions. And by doing that, we immediately step into existing payer contracts, which then as we grow the clinician base in that state, gives us leverage, allowing us to go and negotiate better rates as we gain scale and we're able to demonstrate value to the payers. But the first entry point is always through an acquisition to give us that foothold that we then kind of turn our growth engines on to drive scale.

How much scale do the payers need before they're willing to give this kind of rates that you got, which makes it so attractive to then recruit? What kind of scale do you actually have to have before you're able to get to those kind of -- a kind of negotiated rate?

So you have to realize, so there's 650,000 clinicians in the country. 95% of those, approximately 95%, are sole practitioners. And almost 50% are cash pay. So it's highly, highly fragmented. Nobody ever got enough market power to go even have a discussion with a payer. So it doesn't take a lot of scale. And there's a lot of pressure on payers today because their customers, Delta, Microsoft, Coca-Cola, are screaming at them because they don't have an adequate provider network of mental health clinicians and we're in the middle of the biggest mental health crisis in the world.

I want to jump back to the -- one question we get a lot about is the stock-based comp. I know that's now part of the equation. Is it more for acquisitions? Is it more for retention, the bump that we've seen in stock-based comp year-over-year? Like how do you guys think about, "Okay, here's our established, our thousands of clinicians, this is how many -- this is -- we need to give them that"? Or are you thinking about stock-based comp and saying, "We need to do this for M&A, given the markets and everything else"?

Sure. Mike, do you want to take that?

Yes, I'll take the first part of that in terms of painting the wall of numbers and then I'll turn it over to Danish to talk about the business use of our long-term incentive program. From a stock-based compensation perspective, the expense in 2021, we had roughly $260 million worth of expense, which started nominally in the second quarter when we IPO-ed. 100% of the stock-based compensation expense in 2021 was related to the IPO, so $260 million in 2021. And that number, apples-to-apples, is going to be roughly $160 million this year, which is what we said on our fourth quarter earnings call. Additionally to that, we rolled out our long-term incentive program, which we had been contemplating really since prior to the IPO to ensure that our employees got to enjoy a long-term incentive program. And employees and team members includes our clinicians. So again, roughly 85% of our stock-based compensation expense that we expect this year is related to pre IPO. And only about $30 million will be related to the new employee incentive program. And that pre IPO will be declining significantly throughout the year. Danish, do you want to talk about the -- or Mike, do you want to talk about the -- how we're deploying it?

Yes. I mean the primary place that we're deploying that for our current employees is the clinician base, which comprises approximately 5,000 of our 6,500, 7,000 total employees. And so we're seeing that again, resonate really well in both our ability to attract new clinicians in that this is a unique piece of our value proposition that no one else can offer as well as ensuring that our existing clinicians feel connected to the company, feel an ownership and want to help to drive the overall mission of the business.

If we were to do a -- and I'm sure, Mike, you do this. But between recruiting and acquisition, the ROI on that, how do you think -- obviously, if you're recruiting somebody, the ramp-up time is longer. How does the math work, without specifics? But which is more attractive, generally speaking? And how do you model it out?

The return on an organically higher clinician is much greater. And that is why we have stated really since prior to the IPO, that we're going to be indexing more towards organic growth. And last year, we have. And in fact, Danish is -- or our recruiting organization has been recruiting more clinicians now for a while than we have acquired. And so we're going to continue to see that this year and into next year and so on that the organic growth will continue really coming out of 2021 to be the driver of our growth.

Are you going to start to identify that or tell us, provide those kind of numbers for us?

Kevin, those are -- that KPI as well as others are things that we are looking at to bring forward to the market. We just need to be super confident that we can answer the second, third, fourth, fifth set of later questions that really great analysts like you are going to ask.

I've got them all right here.

I know. And look, as we grow, we learn. We're still a young company. And we're learning about trends and we're learning about the market. And we just want to be very confident in what we bring forward just like we didn't really talk about our visit volumes in 2021. But at the end of the year, we brought forward our visits and had to update 2020 numbers and provide 2021. And we thought that was a really good metric to bring out. So we're going to continue to look at these things and be as transparent as we possibly can.

I've got a question from the audience, which I think is a nice segue. Remind us please of the criteria for hiring clinicians? Are they all psychologists? Or do you -- do they include social workers? I think I know that answer, we've asked that before. What percentage are licensed? What institutions would you lose clinicians to? Where do you get clinicians from? Maybe talk a little bit about that. And is there any reason in the current environment to relax the standards that you've had historically?

So I'll start with that and then I'll let Danish finish. So we employ four types of clinicians: psychiatrists, psychiatric nurse practitioners, psychologists and licensed therapists. So we do not employ life coaches. Everybody that we employ is licensed. The first two, we would put in a bucket of prescribers. And the second two would be non-prescribers. And we -- it's about a 1:4 ratio, 1 prescriber to 4 non-prescribers. Danish, do you want to add anything to that?

Yes. So that's the exact right as far as the mix goes. And then where we're attracting them from is a true spread across multiple variables. Like we kind of talked about before, some coming straight out of training programs, which is obviously an important pipeline for us, people mid-career that maybe in a competing, a mom-and-pop local practice. They may be in solo practice ready to shut down and join a group and get the benefits of being employed. Or they may be coming from a hospital system. And then again, we see people across all stages of the career, early, mid and late. So we're really -- we've built something that really attracts people no matter where they're coming from. We want to make sure that, that full 650,000 clinicians that are in the country are squarely within our target. They're not excluded for any reasons like we're only hiring out of training programs.

And I mean, that question sort of leads to the supply-demand question, right? And a lot of people want to talk about there being a shortage of clinicians. In my opinion, there really is no shortage of clinicians. There's a shortage of clinicians that accept commercial insurance because half of them are cash pay. So that's what creates the supply-demand issue with patients trying to find a clinician to be seen and taken care of.

So that actually is an interesting question. What happens to the volumes of the clinicians that you acquire, meaning a lot of them probably are not in network? Is it all of a sudden, you can just flood them with patients? Like how does that -- is that part of the appeal, besides getting paid out and the financial aspect of it? Is it simply, "Listen, we can provide you as many patients as you want to take at a higher rate and these are commercial payers rather than cash payers, where you might have to go and chase or deal with people writing you checks five times a day"?

Right. So we don't -- we're super fortunate. I'm not sure what it says about our society, but we don't have a patient demand issue. Our patient acquisition cost is really, really low. So there's an abundant need of patients needing to find a provider to be seen and an access to provider in an affordable environment. So again, we're basically -- like 92% of our revenue is in network commercial insurance. So we're able to provide that environment to patients. Do you want to add anything to that?

Yes. For -- if you think about the two ways that a clinician would come into LifeStance, one is through the organic hiring path and one is through M&A. When they come through M&A, they're typically coming with a full case load already. So it's not about filling them with more patients, it's about how do they enjoy all the benefits that you get with LifeStance of support services, health insurance, 401(k) LTIP, you name it, all those benefits that you get versus continuing solar practice. But it's not necessarily about patient volume because you're already entering full. For an organically higher clinician, it is about patient volume in that we are able to demonstrate to them within a reasonable period of time that we can show them quickly. They don't need to go out and worry about finding patients. They need to worry about delivering great care to the patients that we bring to them.

When you do M&A, do you lock up the clinician for a year or 2 years? Are they signing 3-year contracts or something like that? How does that work?

Yes. So in our acquisitions, depending on the state, we may have some incentives for the clinicians to stay over a longer period of time. Similar to the way that we treat any newly hired clinician is we're providing them the same benefits and an incentive to be here over the long term. But that being said, the groups that we're acquiring are not democratically owned. They are typically a single owner. And that owner is 9 times out of 10 is not even a direct contributor to revenue or is a very minor contributor to revenue. Because they have essentially stepped out of direct patient care and are an administrator at this point. So we may have some kind of incentive for them to stay or not. And it's really a deal-by-deal basis. But the point is that the clinicians that are generating revenue, they were employed before. As they join LifeStance, they remain employed. So there's no difference to them other than we're bringing a lot of the benefits that they couldn't get at a small practice when they join LifeStance.

I guess, that lends to this question, which is what's the average tenure of a clinician at LifeStance? I mean, I know you haven't been around for 30 years. But what do you see in terms of the average?

It's really hard to say right now because again, like you mentioned, LifeStance in its entirety has really only been around for 5 years. Some of the groups that we have acquired have been around for 20 or 30 years. And you do see longevity within the clinician base that has preceded even being part of LifeStance. And then you have clinicians that have just recently joined that we still need to see how long they're going to remain. But our goal is to make sure that we are the final place for them as far as their career. And we want to make sure that we're retaining them to the point where they choose to retire.

Presumably organic, but you would just think intuitively someone you brought in organically or out of training would have a longer path than somebody who you might have acquired, right? That's probably age and...

Potentially, I mean, we're not necessarily seeing a big demographic swing in the practice groups that we're acquiring. These aren't people that are all sitting at the age of retirement and then we're bringing them in through acquisition. They also are on their own growth trajectories before becoming part of LifeStance. So they'll have senior partners. They'll have newly added clinicians that are early in their career as well. So that acquisition versus organic hired isn't skewing mid-, later, kind of early stage of career for the clinicians.

The M&A front, interest rates have increased pretty dramatically this year. The amount of capital in the market is not as easy to acquire as it was the last 2 years. Has that changed the acquisition environment, the multiples that you pay, your willingness to pay? I mean, are you -- I guess, it's a little bit of a balance sheet question, but it's also more of what's the environment out there right now. Are clinicians still looking and saying, well, I want the 2021 valuation because -- what's happened there?

So we have a very robust M&A pipeline. We probably have the largest and most accurate database of most practices in the country because we've been at this for 5 years now. So we've said publicly, we're going to spend $50 million to $70 million from an M&A perspective. And that gives us the ability to go out and really cherry-pick targets that we're looking at. We can find the best of the best because we have such a robust pipeline and then continue our inorganic growth as well. I would tell you that private multiples tend to lag public multiples on the way up and on the way down. So I don't think you've seen private company multiples come down as much as you have public company multiples. But I think potential sellers have started working out, "We're headed into a recession, there's a lot of bad stuff going on, maybe this is a good time for me to look at selling my company." So we have a very robust M&A pipeline that we feel very good about.

I cover the dental industry. And the roll-up of dental practices has become a very big industry in the last 3, 4, 5 years. And you go to conferences where you see these dental DSOs, they're called. And there's as many law firms and small banks that do the transactions as there are actually practices. Is there a cottage industry for clinicians now? I mean, you were sort of the first to roll it up. But there are now a couple of other private equity firms that are out there. Who do you deal with now? Is there a -- are there banks? Or are there...

I would say the vast majority, 90-plus percent of our acquisitions, are proprietary deals. We see very few banker deals out there. We're starting to see some small business brokers show up every now and then. But basically, all of our pipeline is proprietarily-driven.

That's helpful. Maybe, I guess, one other sort of growth strategy before we get into numbers part. Another question from investors is a good one. Are there merits, the positives and negatives, in pursuing a de novo strategy now in the current environment? You talked about you were sort of surprised that still 80% of the volumes were being done over telehealth. Take us through where that sits now? Are you seeing any change as we get into the summer? And talk about the de novo strategy.

Sure. So pre COVID, less than 5% of our visits were virtual. We always thought virtual was a tool on the toolbox that we wanted to have. We thought it might be 10%, 15% of our revenue. Little did we know that it would swing to 95% virtual at the peak. And it has tended to tick down about 1 point a month. It stalled out a little bit with the flare-up of Omicron. But we're at 79% today. And we think that, that's going to ultimately tick down to 50-50 for us. We've been talking about telemedicine for literally 40 years. And it's finally here to stay. It's going to stay in a much bigger way. But it's not the be all, end all magic bullet, right? Mental health patients want to have an in-person connection with their mental health provider. They were forced to do virtual care because of the pandemic. They did it. They liked it. It was good. But they don't want to do it all the time. That's very clear. There have been a number of surveys come out that have demonstrated that. So we think our hybrid model is a big differentiator for us in that we can see patients in-person and virtually. If you -- if we're right about the ultimate answer being 50-50, just mathematically, we can go double the number of clinicians that we have today and not change our physical footprint. We're still opening de novos, but we're just moderating that to be prudent from a capital expenditure standpoint and we can go continue hiring on the exact same pace, if not faster.

What drives a de novo decision?

Danish?

Yes. So historically, again when the business was primarily in-person, we really thought about it as every clinician we added, we need to bring on an exam room, so some level of physical real estate to match with that. Now we're clearly not thinking like that. We're thinking about how do we organically and inorganically grow our clinician base? And what is the optimal level of real estate to make sure that the amount of time those clinicians want to work in office versus work-from-home is balanced. And so again, we're being prudent with our capital deployment and making sure that we don't have offices that are essentially sitting there underutilized. And so now our strategies really shift to where are there strategic reasons for opening up a new de novo, which would be expanding geographic reach within an MSA, tapping into a neighborhood or a market that we may not have true access to today and the only option for patients in that market is virtual, where there are submarkets that clinicians want a site in to operate out of and where we have neighboring sites that are at physical capacities that require us to open up another site. And so we're thinking about it differently now in where we place them. We also used to work on a 12-month planning cycle for de novos because it is very predictable. It's just 1:1 clinician to exam room. Now we're working on 6-month planning cycles to make sure that we are modulating that appropriately, depending on how we continue to see a shift in, in-person versus virtual demand, both from the patient and the clinician side.

Okay. Do clinicians actually share offices now?

I mean, sort of a hoteling mindset, right, so clinicians will use the same office. They may come in 2 days a week and work and another clinician will come in and work there 3 days a week.

Can they still personalize those offices then?

Sure. Yes, for sure. That's a really important concept, actually. It's very -- it's a personal thing for the clinician, their office.

How it sits.

Yes. And we'll have some clinicians that will come into the office 5 days a week, but they may still see 50% of their patients virtually, right? But they like the collegial environment.

They kind of want to be in the office to do it. Okay. Let's move on to some financial questions. Prior to the IPO, you had targeted center margins of, I think, 35% to 40% versus the 27% to 29% the last 2 quarters. Do you think now that, that 35% to 40% is still achievable in the future?

Mike?

Kevin, the short answer is yes. And it's going to be just a little bit longer path to get there. When we -- just before our IPO, we had 3 quarters of above 30% center margins. And one was approaching 33%. At the end of 2021, when we had a 2020 cohort that was fully mature, we were between -- we were already in that range for that cohort. The biggest change has been the labor market dynamic and that's impact on growth. The unit economics of the company have not changed. And that's extremely powerful. And it's very resilient because of the hybrid model that we just talked about that we can go community-by-community and make really rational decisions. But it's the impact, as I said, with the increased turnover due to labor market dynamics that have just kind of dampened some of our still pretty phenomenal growth rate on the top line. And I think as long as we can continue to access and grow our net clinician base, we are going to have a path back to that 35% to 40%.

So you still have mature clinics that have those kind of margins?

Yes. We looked at -- again, our largest cohort of, I'll say, clinicians in the de novos of 2021 have -- were pretty much mature at the end of -- or 2020, were pretty much mature at the end of 2021. So when we took that snapshot, it was between 35% and 40%. Now when I look at 2021, they still need to mature through 2022. And I'm sure that, that cohort is clearly impacted by the labor market dynamics. But we're going to really look at this at a center margin level and clinician growth as the driver of our center margin because we can kind of look at the cost perspective now in a much more scientific way. And I love the fact that, again I go back to the hybrid model, being 5% virtual now, 30% -- only 30% in-person now. And so we've got the ability to look market-by-market and do what's right for patients and clinicians. And at the same time, as we consider our planning criteria, we can be very, very prudent about liquidity and profitability and growth. And so we can make a lot of really good decisions.

Just remind us the cohort from 2020 to the end of 2021, what did that margin ramp kind of look like to get to those peak margins?

Yes. It followed kind of our normal ramp that we were talking about at IPO, which was around -- at the 18-month timeframe, we were looking around 2x ROIC on that. And the ramp pretty much followed a 4- to 6-month ramp of clinicians that were brought in, whether they're acquired or hired. But we could get to de novo centers there. And these are de novo centers I'm talking about. We can get to that 35% to 40% right at the end of maturity. And that's about 18 months.

The key to your model is referrals from payers. Some of your behavioral health peers have been more aggressive in advertising. I don't think that's any secret. Some of those are only telehealth-type providers. What would prompt you to explore DTC potentially or any other advertising, brand awareness? I don't know how brand-aware people are of LifeStance. Or is it more of a very localized name of the clinician?

So in the early part of the pandemic, we decided to nationally brand the company. So all centers, every facility that we have is branded LifeStance. So back to the patient demand issue, we don't have a patient demand. We never have and have no plans of spending any money on direct-to-consumer marketing. But it's important to understand where our patients come from. So almost half of our patients come from primary care doctor referrals. So it's estimated that 30% to 50% of a primary care physician's practice today has a mental health diagnosis. So they're desperate to find a mental health clinician that they can refer that patient to that can be seen in a reasonable part of time and on a commercially insured environment. Another 1/4 of our patients come from payers. And then the last 1/4 of our patients typically are self-referred online. So it's a patient population that tends to go online, looking for a therapist or a psychologist, more so than somebody going online looking for a dermatologist or a cardiologist.

Interesting. Okay. All right, that's helpful. I didn't know that. Speaking of payers, recently, Optum made a fairly sizable acquisition in late March. How does HMO ownership impact you? Do you overlap? Does it impact your volumes? Are they now a competitor as well as a customer?

The market is, what, $115 billion TAM going to $220 billion. The fact that they now employ 2,000, 2,500 mental health clinicians is just a spot in the market, it's just tiny. So it has no impact on us. We have a lot of important strategic things that we're doing with Optum as an example, so -- and being the largest 5,000 clinicians, we're still less than 1% of the market. There's a huge white space ahead of us.

When they got involved in the marketplace, when you saw that, did you look geographically and say, "Okay, is that maybe a market where it will be harder for us to recruit"? Or does it just -- it still didn't matter?

It's the patient demand issue. I mean, just there's a 6-month waitlist for most patients to see a mental health clinician today.

6 months?

Yes.

Danish, I should probably ask, you've obviously spoken a lot here today, but you just assumed the role of COO. Congratulations again.

Thank you.

What changes for you? What's your vision? Is there anything that you see, maybe there's an opportunity for you to come in and maybe make a little bit more change? Or anything that you'd like to talk?

Sure, yes. So the official transition takes place on July 1. So really, right now, I'm in listening and learning mode and meeting with all of our operations leaders throughout the country, trying to understand where are there opportunities as well as where do they have pain points that we can start to mitigate for them and allow them to be able to do their -- the great work that they're doing already on growing the commission base, delivering great care to patients and retaining the clinicians that we have. And so over the next kind of 4 or 5 weeks, it will all be about learning and listening. But from there, what I think about this as is I want to come out of that period with some quick wins on areas that we can immediately enact some change that will meaningfully improve the lives of our patients, our clinicians and our operations team members and then be planning for what do the next 18 months look like, meaning I want to be thinking about how do we continue to scale the company, how do we look beyond just the tip of our nose as to what do we need to be 18 months from now or 2 years from now and make sure that we're building the systems and processes that can scale as we continue to grow at an accelerated pace.

So that lends to the question, what needs to -- where does investment need to be made? It's not easy to manage 5,000 clinicians. But I think market estimates are that number is going to be a lot higher in 18 months or in 2 years or in 3 years. What infrastructure do you need to put in place to support that?

Yes. So I'll let Mike jump in here, too. But as we think about this is it's the typical things that you see with scale, which is making sure you have the right business management systems in place, both the intangible processes that are just making sure you have the right meaning cadence, making sure that you're tracking the right KPIs that you're holding people accountable to as well as how do you institute the right scalable systems to be able to monitor that beyond just conversational, which is when you're a smaller company, a lot of things can be done just through conversation. But when you have, even just amongst the clinicians, 5,000 data points and that can't all be a 1:1 conversation between the leaders and the individual clinicians, we have to start putting monitoring systems into place that supplement what we already have today that has worked really well in the scaling that we've accomplished over the last 5 years.

So I guess, the next question, Mike, is how much is this going to cost? And are we accounting for it properly in our models?

That's something we're going through right now in our LRP. The prior long-range plan that we put out there didn't assume the labor market transition. And now we're assuming that, that is structural, at least over the next planning horizon for us until we see something that's giving us multiple data points that, that's going to change. As we go through that, what can we influence positively and what changes do we have to make operationally, if any? When I think forward and when we all think forward, the opportunity is great. And the cost of scaling the company, we're thinking it's probably an 18- to 24-month endeavor for us, but we're thinking 5 to 7 years out. We're thinking long term here. And it's probably systems, some process infrastructure. But these are the things that we invested in late last year. And we're actually starting to see some improvement in our G&A scaling this year. And so that's the way we're going to think about it is investment and return. And when we talk to you about investment, we'll talk to you about return as well.

Sounds good. Well, we're out of time, gentlemen. This has been fantastic. I really appreciate it. Thank you so much. And thanks, everybody, for joining us this morning.

Thank you for having us.

Thank you.