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LifeStance Health Group, Inc. (LFST) Q3 2021 Earnings Call Transcript

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LFST earnings call for the period ending September 30, 2021.

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LifeStance Health Group, Inc. (LFST -5.24%)
Q3 2021 Earnings Call
Nov 08, 2021, 4:30 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good afternoon, and thank you for standing by, and welcome to the LifeStance Health third quarter 2021 earnings conference call. At this time, participant lines are in a listen-only mode. After the speakers' presentation, we will have a question-and-answer session. [Operator instructions] Please be advised today's conference call is being recorded.

[Operator instructions] It's now my pleasure to hand today's conference over to vice president of investor relations, Monica Prokocki. Please go ahead, ma'am.

Monica Prokocki -- Vice President of Investor Relations

Thank you, Holly. Good afternoon, everyone, and welcome to LifeStance Health's third quarter 2021 earnings conference call. I'm Monica Prokocki, vice president of investor relations. Joining me today are Mike Lester, chairman, president, and chief executive officer; Mike Bruff, chief financial officer; and Danish Qureshi, chief growth officer.

While this is my first earnings call with LifeStance, I have been a corporate finance and IR professional for nearly a decade with public healthcare companies. I am excited to be a member of LifeStance and look forward to working with all of you as we continue our journey as a recent public company. We issued the earnings release and presentation after the market closed today, both are available on the Investor Relations section of our website, In addition, a replay of this conference call will be available following the call.

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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. Also, 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, chairman and CEO of LifeStance. Mike?

Mike Lester -- Chairman, President, and Chief Executive Officer

Thank you, Monica. Welcome back from maternity leave, and congratulations on the birth of your son. Good afternoon, everyone. Thank you for joining us today to discuss our third quarter 2021 results.

As society has navigated the pandemic over the past year and a half, we have seen demand for mental healthcare continue to grow. At the same time, we have continued to witness the challenges patients face as they try to get access to high-quality, affordable mental healthcare. The services we offer at LifeStance are needed more than ever. We're deeply committed to our mission to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental healthcare.

Our team combines a vision for the future of mental healthcare delivery with a sharp focus on execution and a growth mindset, evidenced by our strong operational and financial results. During the quarter, we added 400 net clinicians, stabilized clinician retention to 80% annualized aligned with our expectations, opened 29 de novo centers, and completed six acquisitions. The team's solid execution brought our footprint to 4,375 clinicians and approximately 500 centers across 31 states, contributing to our strong growth and enabling us to deliver on our mission of increasing access. Financially, we also delivered at the high end of our expectations including revenue of $173.8 million, up 70% year over year; adjusted EBITDA of $10.7 million; and adjusted EBITDA margin of 6.2%.

We continue to maintain a strong capital position with $212 million of cash on our balance sheet. We've also added new talent to our organization, including the appointment of a new independent director, Seema Verma, to our board of directors. Seema is a leading national health policy expert with over two decades of experience in the healthcare industry, having most recently served as the longest-running administrator for the Centers for Medicare and Medicaid Services. Seema brings to the team deep knowledge of healthcare policy, and we look forward to learning from our expertise.

We continue to invest in management leadership throughout the company, such as business operations, people operations, and information security to strengthen our operating rhythms and the necessary infrastructure to support a growing company. At the end of the third quarter, we had approximately 6,000 employees. Investing in our talent and human capital is paramount. Under our employee equity incentive program, we will be making grants to eligible employees, including clinicians beginning in 2022.

For clinicians, eligibility for equity awards and vesting will be tied to productivity, directly serving our mission of expanding access to mental healthcare at this critical time for the country. We believe our equity program will boost our value proposition in a highly competitive labor market, help attract and retain the talent needed for our outpatient-centric business model, and established an ownership mindset among our employees, including our clinicians. Just as critically, it aligns with our values and purpose and builds on a history of investment in our team by providing meaningful rewards for furthering our mission of enhancing access to mental healthcare in a sustainable manner over the long term. Turning to the market environment.

We believe that patient demand for mental health services has never been greater. From 2019 to 2020 alone, the number of adults seeking psychotherapy increased 28% for a recent McKinsey report. In October, the American Academy of Pediatrics declared a national state of emergency in child and adolescent mental health. At the same time, that patient demand continues to grow, the healthcare industry is experiencing elevated resignations per the latest jobs reports driven by worker burnout, child care cost, and pandemic fatigue.

This has impacted the mental healthcare sector as well. According to a survey published by the National Council for Mental Wellbeing in September, 82% of mental healthcare provider organizations reported, it has been difficult to retain employees and 97% said that it has been difficult to recruit employees. LifeStance is not immune to these broader labor market dynamics and their impact on the mental healthcare industry, in particular, as we shared back in August. While these dynamics present a more difficult operating environment, growth in demand for our services continues, and we are focused on controlling what we can to drive strong results by being the employer of choice for clinicians.

Over the past quarter, we have escalated focus on our clinician value proposition with special attention to engaging with our clinicians our regular and systematic basis and leaning into our values of delivering compassion, building relationships, and celebrating difference. The culture and community we build with our clinicians is what really matters, especially in a high turnover labor market. We've made improvements by engaging clinicians more frequently to hear the stressors in their lives and taking actions to ensure that we continue to support them, both within and outside of the professional setting. For example, we've implemented a systematic way of identifying at-risk clinicians in working to assess and address their needs.

In cases where their compassion fatigue or burnout are identified peer-to-peer support is offered through our national clinical team. Additionally, 100% of clinicians have been assigned champions who have initiated routine one-on-one communications to ensure that we are giving our clinicians opportunities to be heard. These initiatives are an important component of our value proposition to clinicians and core to delivering on our mission. Across our forms for engagement, one clear theme emerged most of all from our clinician feedback.

Many are now feeling the impact of COVID fatigue and value the flexibility to deal with their own mental well-being. As a company focused on mental health, allowing for employees to have a flexible schedule is part of the strategy. To this end, many employees are planning to take more time off than usual during the holidays given the difficult year. and we've adjusted our projections accordingly.

We now expect our full year 2021 revenue to land toward the lower end of the $668 million to $678 million range to which we previously guided, still representing a growth rate in excess of 75%. Clinicians value the flexibility afforded by their careers at LifeStance, and we believe that supporting them is the right move to prioritize the well-being of our approximately 4,400 clinicians providing care for patients across the country. Supporting the well-being of our clinicians will create greater opportunities to recruit and retain talent into the future, and ultimately, lead to a happier, more productive workforce over the long term. Our efforts are paying off.

We are pleased to report that even in the current labor market environment, we grew our net clinician base by 400, a 10% sequential increase in the third quarter in one of the best quarters in the company's history, and retention rates have stabilized at a level consistent with our expectations of approximately 80% annualized within the quarter. This was driven by our laser focus on our clinician value proposition. We've also seen sequential improvement in our clinician satisfaction scores from our internal quarterly surveys, including improvement in our communication scores as we collaborate more closely with our clinicians demonstrating our ability to continue to build a best-in-class environment for the long term. We are taking the necessary actions now that we believe will position us well relative to the market as macro conditions improve.

I'm proud of what we've achieved, but there is much more to do. LifeStance is a leading mental healthcare provider with a broad and unique set of assets and capabilities. I have great confidence that we will be entering 2022 with an extraordinary set of opportunities to help improve the mental healthcare system for all of those we can serve. And now, I'll turn the call over to Danish to provide more detail on the initiatives that are driving growth across the organization.

Danish Qureshi -- Chief Growth Officer

Thanks, Mike, and good afternoon, everyone. First off, I wanted to reiterate what Mike said earlier about how proud we all are of the mission we're serving. Here at LifeStance, we are revolutionizing how patients receive easy access to affordable mental healthcare. There are more than 50 million people in the United States with a mental condition, many of whom are unable to find the care they need.

As we continue to deliver growth nationwide, serving those patients that are in desperate need of care is at the core of what drives us every day. We won't stop until every person in the United States is one click or call away from a LifeStance Health Commission. As we look to continue to transform the industry, our growth strategy remains focused on three core pillars: expanding into new markets, building market density, and deploying our digital tools. In the second quarter, we expanded into five new states, growing our presence to 31 states, and making progress toward our long-term mission of delivering care to all 50 states through either in-person or virtual care.

We continue to have a strong acquisition pipeline of new state entry points and look to become fully operational in approximately six more states in the near term. In the third quarter, we focused our growth efforts on building market density in our five recently entered states, as well as continued density building in our legacy states. We build market density by first, executing on our playbook of hiring more clinicians; second, acquiring tuck-in practices; and third, opening de novo centers. During the third quarter, we made excellent progress against each of these drivers.

On the first driver, we added 400 net clinicians in the quarter, bringing our total clinician base to approximately 4,375, an increase of 72% year over year. Year to date, we've added a net total of almost 1,300 clinicians or approximately 30% of our total clinician base. Our 6-point clinician value proposition continues to resonate in the market as we provide a mission-driven culture, a collegial and collaborative work environment, a strong work-life balance, enhanced digital tools, robust support services, and a competitive compensation package. We are truly dedicated to enhancing our value proposition as an employer of choice for mental health conditions as evidenced by our support for workplace and work-life flexibility.

Second, regarding acquisitions. In the quarter, we completed six tuck-ins, bringing our total to 70 acquisitions since inception, further demonstrating the robustness of our acquisition pipeline. These acquisitions deepened our presence in Atlanta, Austin, Chicago, Seattle, and D.C. and expanded our presence into Columbia, South Carolina.

Third, in terms of de novo centers, during the quarter, we opened 29 new locations and reached a company milestone, our 200th de novo location opening, bringing the total number of centers to approximately 500 nationwide as we continue to strengthen our first-mover advantage and national scale. In addition, we launched a brand-new spatial design for all our new de novo centers going forward that reimagines the mental healthcare experience for both patients and clinicians. Designed to reinforce our commitment to providing compassionate, evidence-based treatment, every detail from lighting to materials to color pallet has been thoughtfully selected to encourage stress reduction and support personalized, high-quality care for patients, as well as collaboration and a best-in-class work environment for our clinicians. The first centers to feature the new spatial design are now open in Chicago and patient and clinician feedback alike has been overwhelmingly positive.

This enhanced design keeps us at the forefront of innovation in healthcare and delivers on our long-term promise to reimagine the mental healthcare experience, both in-person and online. Turning to our growth strategy of deploying our digital tools, we are investing in our digital platform to provide patients and clinicians with a unique, high-quality user experience regardless of how they engage with LifeStance. We are currently focused on improving the overall booking and intake experience by creating a more streamlined process for our patients that reduces the burden on them and our clinicians while also improving our patient-clinician matching process. Our product built in-house will offer personalized experiences based on the workflows and needs of our clinicians and patients.

Our continued investments in digital tools, combined with our investments in physical space design, are a testament to our unique hybrid model that puts LifeStance at the cutting edge of healthcare innovation. We believe in a future where patients receive a unified experience across all channels, regardless of how they choose to receive care with us, and the consistent experience for our clinicians as they flex back and forth between in-person and virtual care. As we look forward to the future, LifeStance continues to have an unmatched offering that will enable us to deliver strong long-term growth for years to come. We remain focused on our core growth strategy, and it continues to deliver consistent results.

We also remain excited about our long-term prospects in the integrated care and value-based spaces as we continue to evolve our solutions in those areas over the coming years. Let me now turn it over to Mike Bruff for a deeper dive into our financial performance.

Mike Bruff -- Chief Financial Officer

Thanks, Danish, and good afternoon, everyone. In the third quarter, we delivered revenue of $173.8 million, up 70% year over year, primarily driven by robust net clinician growth of 72%. Center Margin of $52.1 million increased 57% over the same period last year, driven by strong revenue growth. Center Margin as a percentage of revenue declined 260 basis points year over year to 29.9% as expected as new clinicians ramp to maturity.

Adjusted EBITDA of $10.7 million declined 29% and adjusted EBITDA margin of 6.2% was down from 14.7% in the same period last year, primarily driven by planned investments as we build out our growth initiatives and public company infrastructure. Our balance sheet remains strong. We ended the quarter with $212 million of cash and cash equivalents and $157 million of net long-term debt with no material payments due until 2026. For the nine months ended September 30, 2021, we used $21 million of cash flow from operations, including $23 million for IPO-related payments and $19 million in interest payments on long-term debt.

Our capital allocation strategy remains disciplined as we continue to prioritize investing in our growth, both organically and via acquisitions, as well as in operating efficiency as we scale our clinician and support operations. As Mike said, the market remains robust and the need for mental healthcare has never been greater. We are building LifeStance for the long run to deliver on our mission of increasing access to trusted, personalized, and affordable mental healthcare. We are confident that our investments in our clinicians and in our infrastructure will provide strong leverage and cash returns over the next several years.

Turning to 2021 guidance. As Mike noted, we still expect full year 2021 revenue within our previously guided $668 million to $678 million range but now expect to land toward the lower end, reflecting the anticipated incremental holiday time-off for our clinicians. Guidance for Center Margin of $198 million to $208 million, and adjusted EBITDA of $47 million to $53 million remain unchanged. Looking ahead, we are in the midst of our annual planning cycle for 2022.

As we work toward finalizing our plan, we are considering strategic, financial, and operational factors, as well as continuing to monitor the broader market dynamics. Therefore, we will not be providing formal 2022 guidance at this time. However, our preliminary outlook is for 2022 revenue growth rate in the low 30s and adjusted EBITDA dollar growth rate on pace with or slightly greater than revenue. This assumes retention rates remain relatively consistent with where they are today, and that we move forward with making the appropriate infrastructure and talent investments necessary to execute on our long-term strategy.

We will provide formal 2022 guidance and assumptions on our fourth quarter earnings call. As Mike noted, we remain proud and committed to delivering strong year-over-year growth. We believe that we are delivering a critical service to our patients and continue to see strong demand and unmet need across the country, which will persist. And with that, I'll turn it back to Mike for a few words before going to Q&A.

Mike Lester -- Chairman, President, and Chief Executive Officer

Thanks, Mike. As we look at the market in our environment, we see so much opportunity and room for growth in front of us in a market that is growing mid-double digits and a societal need for mental healthcare that continues to get more recognition and less stigmatization. We know we must invest smartly and continue to build our highly differentiated hybrid platform. We also know we must continue executing on our clinician and geographic growth.

We are confident in our outlook for our company and that our strategy is working and will continue to allow us to build market share. Delivering on our mission of affordable quality mental healthcare for all keeps our approximately 6,000 purpose-driven employees inspired to execute and make a tangible impact. Let me close by thanking our team members and partners for their dedication and support this quarter. We're proud of the work and results that everyone at LifeStance has produced and the enthusiasm they bring each and every day to achieve in our mission.

Now operator, let's go to Q&A.

Questions & Answers:


All right. [Operator instructions] First question is going to come from the line of Ricky Goldwasser with Morgan Stanley.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Yeah. Hi. Good evening, and thank you for the details. So, my question is around productivity and retention.

I mean, these were sort of the key headwinds that you highlighted in the second quarter. Sounds like attrition is stabilizing at the second quarter levels. Can you talk about clinicians' productivity? And how is it sort of progressing versus the expectations that you laid out for us last quarter?

Mike Lester -- Chairman, President, and Chief Executive Officer

Sure. Thanks, Ricky. I appreciate the question. So, our retention rate, as we said, was 80% annualized in Q3, and that was consistent with our expectations for the back half of the year.

As you know, while the labor market dynamics present a more difficult operating environment, we continue to be focused on doing everything that's in our control to drive results and really to be the employer of choice for our clinicians. So, overall, we remain very confident in our ability to grow. We continue to add to our clinician base with 400 net adds in the quarter, which is one of the best quarters that we've had since we started the company. We continue to see -- we're listening a lot more to the clinicians.

We're getting great feedback from them. We think that we've demonstrated this great place to work by the number of clinicians that we're hiring. But we do see this burnout. And you read about it, what is the era of exhaustion in New York Times talked about earlier this week and the great resignation.

But we're engaging more. We're just a little bit concerned about clinicians wanting to take a little bit extra time off during these holidays, which actually makes a lot of sense to us, and then come back completely recharged in January and ready to have a great 2022.

Ricky Goldwasser -- Morgan Stanley -- Analyst

So, just as a follow-up with that, if you think about your 2022 sort of early commentary, the low 30s revenue growth, which I'm kind of interpreting as sort of 30% to 32%. What are you -- kind of like what's the underlying assumptions that are included to get to that sort of growth if we think about organic versus M&A? And then where do you see potential outside to that?

Mike Lester -- Chairman, President, and Chief Executive Officer

Mike Bruff, can you answer that?

Mike Bruff -- Chief Financial Officer

Sure. Good afternoon, Ricky. You're correct. In our comments around our outlook, the low 30s, the biggest change in our model has been to now include the headwind through the full year of 2022 of having the retention at approximately 80% annualized rate.

That's the biggest piece. We believe that the labor market is uncertain as to whether or not this is a structural move or temporary and we believe that it's pragmatic for us to at least assume that at this point in our planning cycle. I think to get any more detail on assumptions at this point is premature. The reason why this is a preliminary outlook is we're still in our planning cycle, and we do want to monitor the market more before we move to finalize that plan.

So, we'll reserve more assumptions until we meet on the fourth quarter earnings call.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Thank you.


Our next question is going to come from the line of Lisa Gill with J.P. Morgan.

Lisa Gill -- J.P. Morgan -- Analyst

Good afternoon, and thanks for taking my question. Just really want to follow up on, in addition to the clinicians taking incremental time-off, are there any incremental bonuses that you have to pay people today, will be my first question. And then secondly, as we think about the competitive marketplace today, how do we think about paying for the clinicians? And you talked about next year equity programs around brands, and I agree with you around that ownership mindset. But what are some of the other things that you're taking into account when we think about incremental cost for 2022?

Mike Lester -- Chairman, President, and Chief Executive Officer

Yes. Ricky, this is Mike Lester -- Lisa, this is Mike Lester. Thank you for the question. We're actually not seeing any unusual wage inflation in the sector above what we've already contemplated in our models and guidance.

We don't see any changes to our prior planning expectations. Our clinician types have always been in high demand, and we recognize that the demand in the way that we set our compensation structure and how we build in wage increases for our clinicians. The equity program that we rolled out, we think, is going to be significant. It was planned for pre-IPO and disclosed in our S-1.

So, there's not an additional cost there. But we've gotten great feedback from the clinicians, and it will -- it's structured in a way -- invest in a way that is centered around their productivity. So, we think that's going to be a very positive impact, at least that's the feedback we've gotten from the clinicians going into next year.

Lisa Gill -- J.P. Morgan -- Analyst

That's very helpful. And then just as a follow-up. Can you disclose the six tuck-in acquisitions? What was the revenue contribution in the quarter from the acquisitions and expected contribution in the fourth quarter?

Mike Lester -- Chairman, President, and Chief Executive Officer

Lisa, we don't disclose that.

Lisa Gill -- J.P. Morgan -- Analyst

OK. Appreciate it. Thank you.

Mike Lester -- Chairman, President, and Chief Executive Officer

Thank you, Lisa.


And our next question is going to come from the line of Ryan Daniels with William Blair.

Ryan Daniels -- William Blair & Company -- Analyst

Hey, guys. Thanks so much for taking the question. Mike, I wanted to dive deeper into the equity incentive compensation. I think that's an important data point and it definitely has potential to engage and gain the workforce more.

So, can you speak a little bit more broadly to how broad that will be? Is it all existing clinicians and employees or just newer ones? Maybe help us understand how it will vest and what those productivity measures are that will drive that vesting or awards? And then I'd also be curious for anyone on the team could hit this one, is going to be used more in potential M&A activity going forward, just given physicians that are maybe owners' equity piece of LifeStance versus just a pure cash M&A transaction fee?

Mike Lester -- Chairman, President, and Chief Executive Officer

Sure. Thanks, Ryan. So, I'll answer the second half first. So, in our history, we've made seven acquisitions to date.

And depending on the size of acquisitions, we have used rollover equity as a tool in those acquisitions. And that's turned out to have worked out really well for us, as well as the clinicians that have rolled over. As far as the 2022 equity program, we're moving forward with that. As I mentioned before, it was planned pre-IPO.

It's designed to ensure that we can continue to obviously recruit and retain the most talented team members. And the design is consistent with other public companies. I would say the one difference is that the majority of our employees are clinicians. So, I think it's going to be a little bit unique in that we have so many clinicians that are able to participate in the equity of the company.

And you have to be a W-2 employee full time -- full-time W-2 employee to qualify for -- or to be eligible for the plan. And again, there's no incremental cost to add clinicians. We're simply moving forward with our original plan to include clinicians in our allocation, which we think is the right thing to do, and it's aligned with our mission.

Ryan Daniels -- William Blair & Company -- Analyst

Yes. No, it sounds like a good program. And then the other one I'll ask is just on some of the technology investments. You talked about more sophistication on personal lines matching, some more rapid onboarding.

I'm curious if that is fully rolled out or if that's something that's in progress. And if it's rolled out, what kind of benefits you started to see on the patient, either satisfaction or matching and retention side? If it's maybe too soon to have data, just any early indicators there would be helpful. Thanks.

Mike Lester -- Chairman, President, and Chief Executive Officer

Sure. Yes. We continue to deploy a number of tech-enabled services and it's really a core pillar of our growth strategy. We continue to invest in that digital platform to provide both patients and clinician-focused and it's with a high -- with a unique high-quality user experience regardless of how they engage with LifeStance.

Danish, could you add some color to that?

Danish Qureshi -- Chief Growth Officer

Sure, yes. So, like we mentioned before, we're working on improving the overall booking and intake experience by creating a more streamlined process for our patients. That reduces the burden on them and our clinicians while also improving our patient-clinician matching process. It's really important to make sure that it's a fit from both sides that not only are you getting the patient the right fit for them clinically but also that you're getting the right types of patients for the clinicians to keep them motivated and focused on the diagnosis that they really like to treat or they're subspecialized in.

The product is totally built in-house and it's offering personalized experiences based on the workflows and the needs of our clinician and patient base. As far as our continued investments in digital tools, we've put out a product innovation road map that's really been built for the end-to-end patient journey, with this being the first priority that we're executing against along that road map.

Ryan Daniels -- William Blair & Company -- Analyst

OK, great. Thank you for the color. Appreciate it.


And our next question is going to come from the line of Kevin Caliendo with UBS.

Kevin Caliendo -- UBS -- Analyst

Thanks. My first question is on the visibility into 2022. And I guess that means how much is M&A? How much visibility do you have on incremental recruitment, what your pipeline look like relative to what it was six months ago? If you can give us some color around the visibility into the revenue number. That's my first question.

Mike Lester -- Chairman, President, and Chief Executive Officer

Mike Bruff.

Mike Bruff -- Chief Financial Officer

Yes. Good afternoon, Kevin. At this point in our cycle, we are looking at all of the underlying growth drivers to determine to what level we're going to -- what level of assumptions that we're going to use for H1. And I think we've been fairly consistent in being able to drive growth in our clinician base this past year.

I would expect us to continue to drive clinician-based growth next year. The wonderful thing about our business model is that we've got multiple levers to pull to drive that growth. We've got optionality to look at organic or inorganic when they make sense. And those are the things that we're working through right now.

With respect to the broader market and the dynamics that we are operating in today, I think the jury is still out as to whether or not some of these things, again, are structural or if they're temporary and allowing us to have more time to understand that and then to finalize our assumptions is the prudent thing. I think we'd be getting ahead of ourselves to try to give you a deeper set of assumptions at this point. I think the only thing that has changed from our modeling is that we are taking the 80% annualized retention through next year.

Kevin Caliendo -- UBS -- Analyst

OK. Fair enough. And I guess when we just look at your sort of guidance, if I just take the EBITDA number forward as well, the margin would have been a little bit lower than what we would have expected given the revenue guidance that you had. And I'm guessing there's some additional spend there that goes above and beyond.

Is it marketing spend? Is it retention spend? Is there anything different from original plan? And if you can maybe not to quantify it, but if you can just talk to what might be different, is it just growth opportunity spend?

Mike Bruff -- Chief Financial Officer

Yeah. Sure, Kevin. Obviously, the first bridging item is fully baking in -- at least from our modeling, is baking in the 80% retention rate. Second is the ongoing investments that we made in the second half of 2021 will carry forward into 2022.

And then we plan to move forward with those expected 2022 investments because we have a tremendous growth opportunity ahead of us. We have a huge TAM to attack. So, I don't think there's anything out of -- that you would think of, no surprises in terms of the broad categories of investment in which we're looking at. I think thinking about the digital and tech-enabled services, those continue to differentiate LifeStance.

It builds out our hybrid model. And then I think just the general public company and other investments in talent that we need to support that growth. So, I won't get too more detailed underneath that simply because we haven't finalized the levels of investment or the allocation among those priorities. But I would suggest that there's not going to be anything that's a big surprise.

Kevin Caliendo -- UBS -- Analyst

Appreciate that. Thank you so much.

Mike Lester -- Chairman, President, and Chief Executive Officer

You got it.


Our next question is going to come from the line of Steph Wissink with Jefferies.

Steph Wissink -- Jefferies -- Analyst

Thank you. Good afternoon, everyone. We have two questions related. The first is on the 80% annualized retention figure.

I'm wondering if you can help us contextualize that, what it was maybe pre-pandemic, how you expect that to trend? I know in the '22 guidance, you're mentioning it holds. But how could that trend over time? What has the peak been in the past? And then I want to ask a related question on the fiscal '22 framework. What are you assuming in terms of the productivity measures per clinician as you roll out into the forward year? Are you assuming that the bookings per clinician or the appointments per clinician is similar in the fourth quarter as it would be for the full year? Or is there some sort of seasonality handicap that's already built in normally to your fourth quarter and you're adding in an additional handicap for additional time off to recover? Thank you.

Mike Lester -- Chairman, President, and Chief Executive Officer

Sure, Steph. Thanks for the questions. As far as retention rates, so as we said in our roadshow in 2020, we saw an 87% retention rate. And due to COVID, we had indicated that we saw we had more clinicians leaving than we had seen historically in 2020.

And so, we felt like that was going to shake out around 80%. We, in fact, have stabilized at around 80%. And feel good with that number on a go-forward basis.

Mike Bruff -- Chief Financial Officer

And when you think about -- Steph, this is Mike Bruff. Sorry, I forgot. I have to differentiate myself. With respect to clinician productivity, for the fourth quarter -- or said differently, for the back half of the year, we had productivity assumptions.

And we're pretty spot-on with those assumptions, especially through the third quarter. Our results came in within our expectations, maybe slightly better than. And for the fourth quarter, at this point, we're not expecting any material change in productivity other than the feedback that we've gotten related to the holidays that clinicians would like to take a couple of a few more days of time-off than normal. Beyond that, we don't have any indication that productivity would change.

But I do think the reason why we're not calling it is that there is, I think, a broader macro debate about what's going to happen with the labor force. So right now, as we think about 2022, we are baking in at least this preliminary outlook that retention stays at 80%. But we have not factored in any shift in productivity one way or the other.

Steph Wissink -- Jefferies -- Analyst

Thank you. Very helpful.


[Operator signoff]

Duration: 44 minutes

Call participants:

Monica Prokocki -- Vice President of Investor Relations

Mike Lester -- Chairman, President, and Chief Executive Officer

Danish Qureshi -- Chief Growth Officer

Mike Bruff -- Chief Financial Officer

Ricky Goldwasser -- Morgan Stanley -- Analyst

Lisa Gill -- J.P. Morgan -- Analyst

Ryan Daniels -- William Blair & Company -- Analyst

Kevin Caliendo -- UBS -- Analyst

Steph Wissink -- Jefferies -- Analyst

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