LifeStance Health Group, Inc. (LFST) Q1 2022 Earnings Call Transcript

LifeStance Health Group, Inc. (LFST -3.31%)
Q1 2022 Earnings Call
May 09, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the LifeStance Health first-quarter 2020 earnings call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] As a reminder, this call may be recorded.

I would now like to turn the call over to Monica Prokocki, vice president, Investor Relations. You may begin.

Monica Prokocki -- Vice President, Investor Relations

Thank you. Good afternoon, everyone, and welcome to LifeStance Health first-quarter 2022 earnings conference 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 close today. Both are available on the Investor Relations section of our website, investor.lifestance.com. In addition, a replay of the 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 our 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 direct 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 -- Chief Executive Officer

Thank you, Monica, and thanks to all of you for joining us today. To begin, I would like to emphasize the importance of our mission of improving access to trusted, affordable, and personalized mental healthcare. As you may know, May is Mental Health Awareness month, a time when we as a country raise the awareness about the importance of our society's mental health. Now and always, LifeStance is committed to helping people lead healthier, more fulfilling lives as the country's largest outpatient provider of in-person and virtual mental healthcare.

Turning to results. We are pleased with the team's disciplined execution of our strategy, which drove solid performance in the first quarter, even through the recent pandemic surge and ongoing labor market dynamics. We continue to see strong demand for our services and consistent execution by the team, which was reflected in our results. Revenue for the first quarter was $203 million, representing growth of 42% and adjusted EBITDA was positive $12 million.

As we've noted previously, revenue growth is primarily driven by our total clinician count. In the first quarter, we grew our net clinician base to 4,989, representing growth of 51% compared with the prior year and in line with our expectations. We believe that our first-quarter performance positions us well for the balance of the year. As a result, we are reaffirming full-year guidance for revenue in the range of $865 million to $885 million, Center Margin of $240 million to $255 million, and positive adjusted EBITDA in the range of $63 million to $67 million.

Mike Bruff will provide additional details about our financial performance in his section of our prepared remarks. Before turning to execution, I would like to remind everyone about what differentiates LifeStance's business model from pure-play telehealth companies in the market. Compared with virtual healthcare companies, our nearly 5,000 W-2 employed clinicians are able to deliver mental healthcare services in person or virtually, a source of sustainable competitive advantage for LifeStance and one of the key drivers of our momentum in the market. Independent third-party surveys continue to support LifeStance's approach to care.

For example, according to a recent Blue Cross Blue Shield survey, nearly 70% of patients want to see the same clinician both in person and via telehealth. It is clear that patients and clinicians want convenience, choice and control over when and how to access or provide mental health services, and we are uniquely positioned to deliver on both patient and clinician preferences due to our flexible hybrid model. Furthermore, patient demand for our services has never been stronger. Not only are patients attracted to the hybrid model, but we also provide affordable access to care through coverage that is in-network with commercial insurers as opposed to cash-pay or subscription-based online models.

Additionally, because of our diverse mix of prescribers and therapists, patients can access personalized comprehensive care to meet each individual's unique mental healthcare needs. And as we have noted previously, our patient acquisition costs remain very low as the vast majority of our patients come directly from sticky primary care referrals, in-network payer relationships, and organic online self-referrals. We are not and never have been dependent on direct-to-consumer paid marketing. Turning to execution.

In the first quarter, I'm pleased that we've been able to demonstrate consistent performance and are executing effectively on our profitable growth strategy. We are reimagining how patients receive easy access to affordable mental healthcare. To deliver on that goal, we continue to focus our growth strategy on three core pillars of expanding into new markets, building market density, and deploying our tech-enabled services. In terms of expanding into new markets, we entered into six new states in 2021 and are now deepening our presence in our existing 32 states, contributing to our mission of improving access.

As for building market density, clinicians remain our primary growth driver. And in the first quarter, we grew our clinician base nationwide. We added 199 net clinicians in the first quarter, bringing our total to 4,989, an increase of over 50% year over year. This strong growth, especially in the current labor market environment, demonstrates that our value proposition is resonating as we continue steady net clinician growth each quarter.

Our growth in our clinician population is also an indication of our operational capability to onboard and ramp new clinicians within our organization, one of the largest W-2 employed groups of clinicians in the mental healthcare space. Our clinician growth was driven by our organic recruiting engine, as well as our practice acquisition engine. In the first quarter, we opened 41 de novo centers to bolster our physical presence in addition to our virtual service offering, adding to our over 500 centers nationwide. Additionally, we completed two new acquisitions in the first quarter, bringing the total since inception to 79.

Both acquisitions were tuck-ins to platforms in existing states in which we operate, Michigan and Massachusetts. Growing our clinician base supports our mission of improving access to affordable, high-quality mental healthcare. In terms of deploying our tech-enabled services, we believe that our opportunities to implement digital tools to support patients' ability to navigate their mental healthcare experience is a significant competitive advantage for LifeStance. As we previously announced, we are rolling out a new, improved online booking and intake experience, or OBIE for short, to better match our new patients with clinicians and to set them up for success in that first visit.

We have continued to deploy OBIE across the country and are now live in seven states. In these states, we have seen a significant reduction in the number of online cancellations because of improvements in the intake and booking process and an increase in levels of patient satisfaction. This enhancement will continue to 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. I have great confidence in our ability to continue to execute our strategy and take advantage of the considerable market opportunities in front of us.

Finally, in the first quarter, we released a State of Youth Mental Health Report, including the results of a survey of 2,000 American parents. We learned that 68% of parents have seen their children face significant mental and emotional challenges during the pandemic and are looking for solutions. To further improve access for youth and support the destigmatization of mental health, we awarded grants through the LifeStance Health Foundation to several nonprofits that directly serve youth and adolescent populations, including the American Foundation for Suicide Prevention. We are committed to expanding access to mental healthcare among at-risk populations and directly addressing the alarming increase in young people struggling with their mental health.

We're honored to partner with organizations that share our vision of a truly healthy society where mental and physical healthcare are unified to make lives better. In closing, we're starting 2022 with strong momentum for the first quarter of continued profitable growth as a public company. I'm confident in our future and our ability to help people on their path to better mental health. Now I'll turn it over to Mike Bruff, chief financial officer, to provide more detail on our financial performance and outlook.

Mike?

Mike Bruff -- Chief Financial Officer

Thanks, Mike. Today, going forward, I will frame my comments in the context of our long-term strategy, which includes balancing growth, profitability, and liquidity considerations. So let me start with growth. LifeStance continued to deliver solid growth in the first quarter with revenue of $203 million, up 42% year over year.

We believe that first-quarter revenue overachieved our expectations, primarily due to Omicron having less of an impact in February and March relative to our initial estimates. Turning to profitability. In the first quarter, Center Margin of $54 million increased 23% over the same period last year, driven by strong revenue growth. Adjusted EBITDA remained relatively flat year over year at $12 million or 6.2% of revenue.

Adjusted EBITDA as a percentage of revenue declined due to the decrease in Center Margin as a percentage of revenue, partially offset by improved leverage in G&A expenses. First-quarter adjusted EBITDA exceeded our initial expectations, primarily due to the slight revenue favorability and delayed G&A expenses, which we expect will be utilized across the remainder of the year on planned investments. Turning to liquidity. LifeStance continues to be supported by a solid balance sheet.

We exited the quarter with cash of $114 million and net debt of $177 million. In the first quarter, we generated positive $3 million of cash from operations. As we announced this afternoon with our earnings release, we entered into a new credit facility in early May. This facility will be used to repay our existing net long-term debt at a more favorable cost of debt than the existing credit facility and at the close will provide access to incremental capital to fund growth through up to $100 million in delayed draw loans and $50 million in revolving loans, both undrawn at close.

Turning to guidance. As Mike mentioned, we are reaffirming our guidance for the full year. For the second quarter, we expect revenue of $209 million to $214 million, Center Margin of $57 million to $61 million, and adjusted EBITDA of $12 million to $15 million. As we noted last quarter, we expect improvement in profitability in the second half of 2022 based on continued growth in our clinician base and leverage in the second half of the year, driven by our strategic decision to moderate our de novo center openings and scale our G&A.

To summarize, we remain focused on delivering on our long-term strategy through balancing growth, profitability, and liquidity considerations. With that, I'll turn it back to Mike Lester for a few words before going to Q&A.

Mike Lester -- Chief Executive Officer

Thank you, Mike. Our financial performance, execution, and differentiated strategy creates strong momentum going into the balance of 2022 and a clear path to achieve our goals. We have solidified our leadership role in behavioral health delivery as a trusted partner to patients. As we build upon this trust, we will continue to drive meaningful improvements in the cost of care, access and engagement across our flexible hybrid model.

I would also like to take a moment to recognize the continued contribution of all of our colleagues at LifeStance who have played a vital role during the pandemic and are now looking forward to continuing to build our best-in-class platform. We're proud of what they do every day in the lives of our patients. Mike, Danish and I will now take your questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Ricky Goldwasser with Morgan Stanley. Your line is open.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Yes, hi. Good evening. Just wanted to get a sense, how is clinician retention in the quarter? And sort of what are you seeing in terms of wage inflation and hiring?

Mike Lester -- Chief Executive Officer

Yes. I would say that our clinician retention has remained stable over the last couple of quarters. So we feel good about the value proposition that we have for clinicians, and we haven't seen that change.

Ricky Goldwasser -- Morgan Stanley -- Analyst

And then in terms of wage inflation and kind of like hiring?

Mike Lester -- Chief Executive Officer

I'm sorry, could you say that again, Ricky? Wage inflation?

Ricky Goldwasser -- Morgan Stanley -- Analyst

What are you seeing -- yes, wage inflation and just kind of like the overall kind of like cost inflation.

Mike Lester -- Chief Executive Officer

Sure. Go ahead, Danish. Do you want to answer that?

Danish Qureshi -- Chief Growth Officer

Sure. Yes, happy to. So we continue to see wage increase year over year as we always have. Our clinician type has always been high demand, and we have always recognized that in the way that we set our compensation structure and build and plan for wage increases over time for all of our clinicians.

Those sort of increases have always been well received by our clinicians, and they all remain within our planning assumptions. So we feel good about where we're at in the year and how things look.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Thank you.

Operator

Our next question comes from Lisa Gill with J.P. Morgan. Your line is open.

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

Thanks very much, and thanks for taking the question. I just want to understand how we should think about the progression of the year. And I think, Mike, I heard you say that the clinicians coming in at 199 was in line with your expectations. But if I look back, it's been averaging like 400 a quarter.

So as we think about the back half of the year, do you expect an acceleration in the number of clinicians that you bring in? Or are there more things on the productivity side? I know you've talked us about technology and some of the opportunities there. And then also as we think about the clinicians, you talked about the acquisitions that you made. Can you talk about those 10 acquisitions? Did you bring clinicians in with that? And what level of productivity have you seen there?

Mike Lester -- Chief Executive Officer

Sure. Thank you, Lisa. So I guess I would start off by reminding everybody that there are 650,000 clinicians in the country today, and we're still less than 1% of that. So we don't guide to specific clinician count but expect to see a continued strong growth of our clinician base.

And again, I think that reflects the value proposition and that continues to resonate in the market. Danish, would you like to add anything to add?

Danish Qureshi -- Chief Growth Officer

Sure, yes. I mean, in terms of Q1, our clinician count is right on point with our internal expectations. We're going to experience quarter-to-quarter fluctuations. As you pointed out, last year in Q1, we also had approximately 200 net adds.

But from where we stand right now, we have a solid cadence on organic hiring. We continue to have a strong M&A pipeline that we feel good about and retention remains stabilized.

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

And so if we just think about -- Danish, do you expect that the productivity gains to come as we move -- I'm just looking at kind of first half of you just gave us the guidance for the second quarter, and you obviously reported the first quarter. And as I think about that acceleration into the back half of the year, I'm just trying to understand what the key drivers are going to be there since so much of the model is driven based on clinicians. So is it really that they become that much more productive? Or do you think we're going to see an acceleration of incremental clinicians in the second quarter that will be productive in the back half of the year? Just if you can help us to think that through in any way.

Mike Lester -- Chief Executive Officer

So we haven't guided on productivity. There are many variables to productivity. So timing of our M&A. There's a geo mix as we expand into newer states.

That's generally at a lower rate until we build out density and go renegotiate rates with payers. There's a variation in the number of business days in any given period. As we've reached sort of the scale that we're at today, we see that our performance is becoming more subject to seasonality based on business days. A good example of that would be second half of the year has less business days just due to the number of holidays in Q4 alone.

So we just -- we still feel good about the way we hire and recruit. Mike, would you like to add to that?

Mike Bruff -- Chief Financial Officer

I think, Lisa, from a productivity perspective when we think about our individual clinician, we haven't made any changes to -- material changes to our ramp assumptions, onboarding, et cetera. The general productivity of a clinician is still within the range of expectations that we've had. But as Mike said, if you look at the overall base on a quarter-to-quarter perspective, you'll see some fluctuations just depending on, again, the timing of certain things we're aware, the timing of an M&A we're aware. In the country, we may hire depending on the rates there.

You can see this in some of our history as well. But at the individual clinician base there, it's certainly within the range of our expectations.

Operator

Our next question comes from Chris Neamonitis with Jefferies. Your line is open.

Chris Neamonitis -- Jefferies -- Analyst

Great. Thanks, everyone, and congrats on a nice quarter. So we recognize that in-person is always going to be core to the offering. I don't think there's any dispute to the merits of the hybrid offering.

But the way you build the model out and also to the KPIs you provide publicly, it all comes down clinician count, right? So at what point should we think about clinician growth maybe necessitating more real estate? How should we think about the leverage you can get out of your current physical footprint? Would you need to modify existing centers? And if you don't need to modify your footprint, how does that change the long-term outlook for center margins? 

Mike Lester -- Chief Executive Officer

So we've -- our guidance assumes a very intentional moderation of de novo openings. So we've talked about this in the past. Pre-COVID, we were -- less than 5% of our visits were virtual. That's backed up into the high 90s and has tended to tick down about a point a month.

I would say it stalled out a little bit in November, December, January because of Omicron and have continued to tick down. We're about 79% in April actually. And we've spent quite a bit of time talking with payers. And we believe, as well as the payers believe, that in the mental health space, this is going to shake out around 50-50.

Does that take a year to get to 50-50? Does it take two years? We really don't know. But again, we're really agnostic to that because we have negotiated rate parity in the vast majority of our contracts. So we're just trying to be very, very prudent with our capital. Even at, let's call it, 79% today, we have a long way to go to 50-50.

If you believe 50-50 is the right answer, we can mathematically double the number of clinicians that we have today and not expand our physical footprint at all. So we feel really good about that. We feel good about the leverage that gives to us in the market.

Chris Neamonitis -- Jefferies -- Analyst

Got it. And then I appreciate the commentary on the differentiation versus pure-play telehealth. But can you talk a bit about how your model is different versus those offerings in terms of patient acquisition and prescribing practices? And when you think about the visits that are driven off of referrals, what are you hearing from your referral base in terms of their preferences in terms of where they redirect patients to? Thanks.

Danish Qureshi -- Chief Growth Officer

So I can handle that. So in terms of patient acquisition, our patient demand for our services has never been stronger. Our hybrid model and diverse mix of prescribers and therapists are very comprehensive, and we continue to believe it differentiates us in the marketplace. Our patient acquisition costs remain very low because the majority of our patients come directly from three organic levers, one being sticky primary care referrals.

So these are established relationships with PCP networks across the country that remains very healthy. Our in-network relationships with payers that direct membership or way as well as organic online self-referrals. So if you look at it in terms of the totality of spend, last year, we spent less than 2% of revenue on marketing. This year, we're trending to less than 1%.

So again, we are not -- this is not an acquisition model that is heavily based on bidding on keywords or nonsustainable kind of referral patterns.

Operator

Our next question comes from Kevin Caliendo with UBS. Your line is open.

Kevin Caliendo -- UBS -- Analyst

Thanks. I just want to -- you kind of alluded to this, so I'm going to ask it this way. I just want to frame the 200 sort of net adds. Is this a good organic number right now in terms of how we should think about the business going forward.

Sort of is this a steady state? I'm asking in the context of the long-term planning for the business. Interest rates are higher. Inflation is higher. It feels like the job market is a little bit steadier now than it was before.

People net income or net worth is probably not as high as it was a year ago, broadly speaking, at least relative. Is that a fair way to frame your opportunity? Or is this just sort of one data point?

Mike Lester -- Chief Executive Officer

Well, I think it's -- I'll let Danish jump in here. I think it's kind of one data point. I mean in a kind of a perverted sense, inflation could be viewed as our friend. And then from a labor market dynamics, I think people are going to have to go to work, go back to work.

They chose to sit out for a while when they're paying $8 a gallon for milk and gasoline. But historically, we haven't guided to clinician accounts for the year, and we still feel good about our ability to hire and retain clinicians. Danish, do you want to add?

Danish Qureshi -- Chief Growth Officer

No, I'd just add that our overall mix of net clinician adds continue to skew heavier and heavier toward organic over time. However, M&A is also -- the pipeline that we have remains robust. And we'll -- between those, we're going to continue to see quarter-to-quarter fluctuations in the number of net adds. So again, I wouldn't read too much into a single data point of 199 ads and what that indicates.

Again, we feel very confident in the ability of our organic recruiting engine to continue to increase the number of adds and for M&A to be a meaningful contributor as well.

Kevin Caliendo -- UBS -- Analyst

If I can ask one follow-up. For your Center Margin targets, can you take me through sort of what are the pushes and pulls that get you to either side of the range? Like what would matter the most in terms of a margin at the high end or low end of your range?

Mike Bruff -- Chief Financial Officer

Kevin, is that -- are you asking that on the full year? So the main driver on that is going to be revenue growth. So we have already planned our fixed costs in terms of the number of de novo adds. Therein with our centers, we have fixed costs of on-site admin, very important administrative staff there. And so this really gets down to driving top-line growth.

And with the unit economics of the clinician that is driving that, those economic -- the growth in those economics over those fixed costs and that will drive the high and the low end there. It's really about top-line growth.

Operator

Our next question comes from Jamie Perse with Goldman Sachs. Your line is open.

Jamie Perse -- Goldman Sachs -- Analyst

Hey, good afternoon, guys. I wanted to follow up on the clinician productivity question from earlier. Are there any stats you can provide just in terms of what percent of your clinicians are fully ramped and fully productive? And obviously, new clinicians are dilutive to that. So just trying to get a sense of where you are in clinicians ramping to productivity and how that might impact how we think about gross margins for the rest of the year.

Danish Qureshi -- Chief Growth Officer

Sure. This is Danish. I can cover that in terms of how this plays out at the individual clinician level. So again, there is a ramp period as we've talked about in previous calls.

There is a ramp period for clinicians regardless of whether they're coming in through organic recruiting or through M&A. On the organic side, there's typically a four- to six-month ramp from start to maturity, which is essentially at the point they have a full case load. And then for M&A, it's more of a step function, but it is also a four- to six-month time period from when we get them onto our platform and you start to enjoy the full benefits of them being on our contracts and the revenue kind of uplift from that. You see the same kind of time period on both.

And then obviously, you can play through the fact that retentions remain stabilized at the same level that we witnessed in previous quarters and kind of the net effect there.

Jamie Perse -- Goldman Sachs -- Analyst

OK, thanks. And then just maybe a follow-up on the contribution to growth from M&A. You guys previously guided to $50 million to $70 million for the year. It looks like you did about $23-or-so million in the first quarter, so a good chunk of that already done.

Any change in sort of the cadence of M&A you expect this year? Or if that $50 million to $70 million is still the right number, should we expect contribution from M&A to come down throughout the rest of the year?

Mike Lester -- Chief Executive Officer

No, we feel very comfortable with the $50 million to $70 million guidance that we've given out there. That just ebbs and flows throughout the year. It's a little bit harder to control. It's just not linear.

But we have a very robust pipeline, and that will be -- we think that will be really in our control on how we decide to modulate that. But we feel comfortable with the $50 million to $70 million.

Operator

Our next question comes from Ryan Daniels with William Blair. Your line is open.

Nick Spiekhout -- William Blair and Company -- Analyst

Hey, guys. Nick Spiekhout on for Ryan. Thanks for taking my question. I guess kind of going on the inflationary front, I'm just wondering, how able are you guys to pass off things like wage inflation onto the payers? And is there -- kind of like what's the amount of time that would typically take to work that through contracts?

Mike Lester -- Chief Executive Officer

So I'll let Danish talk about wage inflation from the clinician standpoint to begin with, but I'll start off by saying inflation has given us permission to pick up the phone and call every single one of the payers. And so you can rest assured that we are doing that. There's a lot of pressure on everybody from an inflation standpoint, and we will be using the market power that we have to have those discussions. Danish, do you have anything to add?

Danish Qureshi -- Chief Growth Officer

No, that's exactly right. We continue to engage in consistent conversations with all of the payers that we're in network with about this exact topic. They're very receptive and acknowledge the fact that this is something that everyone in healthcare needs to be focused on. But again, we've always planned for this, and we feel very comfortable that our planning assumptions take into account this year any expected wage inflation and that we've passed appropriate increases on to our clinicians and that we have an appropriate pipeline of increases coming from payers to keep us in a good time.

Nick Spiekhout -- William Blair and Company -- Analyst

OK, great. And then regarding your argument that kind of that those pressures are going to push a couple of people to go back in the workforce, which I can definitely appreciate. I was just wondering, have you guys seen any providers that might have left LifeStance a year or so ago, now reassessing where they're at and actually coming back to LifeStance? Basically I'm trying to think of -- are we just getting clinicians back in the workforce? Are we getting specifically former LifeStance clinicians back in?

Mike Lester -- Chief Executive Officer

Yes, we really haven't seen that. There are lots of little anecdotes out there, but we haven't seen that in any significant way yet.

Operator

Our last question comes from Gary Taylor with Cowen. Your line is open.

Gary Taylor -- Cowen and Company -- Analyst

Hi, good morning, good afternoon, good evening. I wanted to ask about DSO, which has been creeping up for about four quarters in a row, and just see what was driving that. What would help bring that back down? And then just secondly, to put a finer point on Lisa's question. If you're doing $26 million EBITDA in the first half for your guidance, you've got to do $39 million in the second half to get to the midpoint of guidance, which means quarterly EBITDA has to move up toward almost $20 million a quarter.

And just wanted to understand better what you thought the drivers of that were going to be. A little bit of that is revenue, but it really does look like the margin estimates or expectations have to be a fair amount higher in the second half.

Mike Bruff -- Chief Financial Officer

Hey, Gary. This is Mike Bruff. For the first question around DSO, accurate observation there. Our DSO has crept up and meaningfully settled in the first quarter.

And this has to do mostly with the increased pace of M&A that we saw toward the end of last year. And when we bring in that M&A and we work through integrations, we will, at times, intentionally hold claims until we work through the integration process and move that clinic and those clinicians onto our rates. If we don't do that, then we might be reprocessing a lot of claims. So this has a little bit to do -- actually quite a bit to do with the timing of some of our acquisitions.

It was a large driver of the increase in accounts receivable here in the first quarter. So this is more to do about the timing of acquisitions, and we would expect relative to last year to be a little bit more tempered this year. Our expectations is to acquire between $50 million and $70 million or deploy $50 million to $70 million of capital for acquisitions this year. The second question with respect to adjusted EBITDA significantly increasing half over half, it is really 2 things.

One, as I said, the growth expectation in half over half in terms of revenue and our decreasing or slowing the ramp -- or not ramp, pardon me, slowing the pace of de novo center openings. So we will get a profitability boost by doing that in the back half of the year. And as I mentioned already in the prepared statements, in the first quarter, we had leverage in our G&A expenses, which were about 150 basis points lower than the first quarter last year in terms of percentage of revenue. So those two things, driving increasing revenue over fixed center costs and slowing fixed vendor costs and then continuing to be maniacally focused on driving leverage in our operating expenses.

And that's what we believe will get us to our full-year guidance range.

Gary Taylor -- Cowen and Company -- Analyst

That's helpful. Thank you.

Operator

Thank you. This concludes today's conference call. Thank you all for participating. You may now disconnect.

Everyone, have a great day.

Duration: 39 minutes

Call participants:

Monica Prokocki -- Vice President, Investor Relations

Mike Lester -- Chief Executive Officer

Mike Bruff -- Chief Financial Officer

Ricky Goldwasser -- Morgan Stanley -- Analyst

Danish Qureshi -- Chief Growth Officer

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

Chris Neamonitis -- Jefferies -- Analyst

Kevin Caliendo -- UBS -- Analyst

Jamie Perse -- Goldman Sachs -- Analyst

Nick Spiekhout -- William Blair and Company -- Analyst

Gary Taylor -- Cowen and Company -- Analyst

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