LifeStance Health Group, Inc.
|Company Name||LifeStance Health Group, Inc.|
|Class Period||June 07, 2021 to August 10, 2022|
|Lead Plaintiff Motion Deadline||October 11, 2022|
On or about June 11, 2021, LifeStance conducted its IPO, issuing 46 million shares at $18 per share.
On August 11, 2021, LifeStance announced its financial results for second quarter 2021, which ended just days after the IPO. The Company reported a net loss of $70 million and also disclosed that its operating expenses had more than tripled during the second quarter. LifeStance stated that it had experienced a significant, negative “recent change in clinician retention levels.”
On this news, the Company’s stock price fell $10.16, or 46%, to close at $11.71 per share on August 12, 2021, thereby injuring investors.
Then, on November 8, 2021, LifeStance released its third quarter 2021 financial results, disclosing that “[c]linician retention [had] stabilized to approximately 80% annualized in the third quarter,” and that the Company was having to increase spending on “enhanced clinician engagement and continued support for workplace and work-life flexibility.”
On this news, the Company’s stock price fell $3.10, or 24%, to close at $9.73 per share on November 9, 2021, thereby injuring investors further.
Then, on March 10, 2022, LifeStance reported its fiscal 2021 results, stating that a recent study had shown that three quarters of mental health patients prefer in-person services and that through 2021, telehealth services trended downwards. Additionally, the Company stated that it would be reducing the number of brick and mortar facilities that it would be building in the immediate future in order to increase its profitability.
At the time the complaint was filed, LifeStance’s common stock has traded as much as 73% below than the IPO price.
The complaint filed in this class action alleges that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the number of virtual visits clients were undertaking utilizing LifeStance was decreasing as the COVID-19 lockdowns were being lifted, thereby flatlining the Company’s out-patient/virtual revenue growth; (2) that the percentage of in-person visits clients were undertaking utilizing LifeStance was increasing as the COVID-19 lockdowns were being lifted, thereby causing the Company’s operating expenses to increase substantially; (3) that LifeStance had lost a large number of physicians due to burn-out and, as a result, its physician retention rate had fallen significantly below the 87% highlighted in the Registration Statement and the Company had been expending additional costs to onboard new physicians who were less productive than the outgoing physicians they were replacing; and (4) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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