LifeStance Health Group, Inc.
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LifeStance is one of the nation’s largest providers of virtual and in-person outpatient mental health care. At the time of its IPO, the Company operated 370 centers and employed 3,300 psychiatrists, advanced practice nurses, psychologists, and therapists across 27 states. The Company provides virtual and in-person outpatient mental health care for children, adolescents, and adults experiencing a variety of mental health conditions including depression, anxiety disorder, schizophrenia, and post-traumatic stress disorder.
Due to Covid lockdowns, total patient visits increased from 1,353,285 in 2019 to 2,290,728 in 2020. Meanwhile, the Company’s total revenue grew from $212.5 million in 2019 to $377.2 million in 2020 on a pro forma basis.
The approval and introduction of Covid vaccines beginning in December 2021 increased demand for in-person services and fewer patients would be seeking virtual care. In-patient services are also inherently more expensive as they require office space, etc. Many physicians were also burned out at this point and were resigning, resulting in a shortage and a need for new physicians to be hired and trained, increasing costs.
On February 16, 2021, LifeStance filed a Registration Statement on Form S-1, which, after several amendments made pursuant to comments from the SEC, would later be utilized for the IPO. Initially, the defendants stated they intended to sell a total of 40 million shares at a price range of between $15.00 and $17.00 per share, however, based on the defendants’ strong marketing efforts to sell the IPO, they were able to price the shares sold in the IPO at $18.00 per share and to sell 46 million shares in the IPO. In the Registration Statement, the Company highlighted its aforementioned growth numbers while claiming it currently had exciting growth opportunities on its horizon. It then claimed that Covid had had no material impact on its business, instead pointing to decreased stigmatization of mental health, though it allowed that the pandemic had shown a “spotlight” on mental health that would cause its business to continue to increase.
On August 11, 2021, less than two months after the IPO, LifeStance announced its second quarter 2021 (“2Q21”) financial results for the period ended June 30, 2021 disclosing a net loss of $70 million, compared to net loss of just $27.6 million for the period from April 1, 2020 to May 14, 2020 (Predecessor) and $4.3 million for the period from April 13, 2020 to June 30, 2020 (Successor). The company also now disclosed a decrease in its clinician retention levels.
On November 8, 2021, the Company reported its third quarter 2021 results, announcing that its clinician retention had “stabilized” at around 80%. Defendants reported LifeStance’s fiscal 2021 results on March 10, 2022, and during a conference call with investors admitted that a recent Stanford study had shown that 75% of patients prefer in-person treatment. It also said that it would be reducing its number of brick and mortar facilities that it was planning on building to increase profitability.
LifeStance common stock currently trades at $8.11 per share, over 50% below the IPO price of $18.00 per share.