| Source: Bernstein Liebhard LLP Bernstein Liebhard LLP
New York, New York, UNITED STATES
Did you lose money on investments in LifeStance Health Group? If so, please visit LifeStance Health Group, Inc. Shareholder Class Action Lawsuit or contact Peter Allocco at (212) 951-2030 or [email protected] to discuss your rights.
NEW YORK, Aug. 11, 2022 (GLOBE NEWSWIRE) — Bernstein Liebhard LLP announces that a securities class action lawsuit has been filed on behalf of investors who purchased or otherwise acquired the common stock of LifeStance Health Group, Inc. (“LifeStance” or the “Company”) (NASDAQ: LFST) pursuant and/or traceable to the Registration Statement and Prospectus (collectively, the “Registration Statement”) issued in connection with LifeStance’s June 10, 2021 initial public stock offering (the “IPO”). The lawsuit was filed in the United States District Court for the Southern District of New York and alleges violations of the Securities Exchange Act of 1933.
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.
The Company benefitted from the state and local lockdown orders necessitated by the COVID-19 pandemic starting in the spring of 2020. However, by December 2020, several COVID-19 vaccines were being approved and administered, meaning LifeStance’s access to clients seeking virtual mental health services would significantly decline while demand for in-person services would increase. Meanwhile, LifeStance internal company records demonstrated that providing virtual services cost LifeStance far less as its service providers could work from home, avoiding the costs of high rents for offices, office personnel staff, and related expenses. Also, because LifeStance had been utilizing physicians from around the country to meet strong patient demand during the COVID-19 lockdowns, increasing inpatient service demand was increasing the workload on certain of its physicians, many of whom were getting burned out and resigning, requiring that new physicians be hired and trained.
Plaintiff alleges that Defendants’ statements in the Registration Statement were materially false and misleading when made because they failed to disclose the following material facts which existed at the time of the IPO: (1) 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) 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; and (3) LifeStance had lost a large number of physicians due to burn-out and, as a result, the Company had been expending additional costs to onboard new physicians who were less productive than the outgoing physicians they were replacing.
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. During the 2Q21, the Company’s operating expenses had more than tripled and the Company had experienced a significant, negative “recent change in clinician retention levels” during the 2Q21.
On November 8, 2021, the Company reported its third quarter 2021 results, now explaining in its press release that “[c]linician retention [had] stabilized to approximately 80% annualized in the third quarter.” Defendants also stated LifeStance was also having to increase spending on “enhanced clinician engagement and continued support for workplace and work-life flexibility,” i.e. lowering physician productivity, in order to keep its existing physicians.
On March 10, 2022, Defendants reported LifeStance’s fiscal 2021 results. During a conference call that day, LifeStance’s CEO, defendant Michael Lester, admitted that a recent large clinical study by Stanford had confirmed that three quarters of mental health patients prefer in-person services, stating that “[w]hen COVID first emerged in 2020, our patient visits moved from 5% virtual to over 90% virtual within weeks,” but that “[t]hrough 2021, our telehealth mix trended downward to the low 80s, and we expect that mix to be approximately 50-50 virtual versus in-person over the long term.” .
Since the IPO, the price of LifeStance’s common stock has fallen over 56%, closing at $7.86 per share on August 10, 2022.
If you wish to serve as lead plaintiff, you must move the Court no later than October 11, 2022. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Your ability to share in any recovery doesn’t require that you serve as lead plaintiff. If you choose to take no action, you may remain an absent class member.
If you purchased or otherwise acquired LFST common stock, and/or would like to discuss your legal rights and options please visit LifeStance Health Group, Inc. Shareholder Class Action Lawsuit or contact Peter Allocco at (212) 951-2030 or [email protected].
Since 1993, Bernstein Liebhard LLP has recovered over $3.5 billion for its clients. In addition to representing individual investors, the Firm has been retained by some of the largest public and private pension funds in the country to monitor their assets and pursue litigation on their behalf. As a result of its success litigating hundreds of lawsuits and class actions, the Firm has been named to The National Law Journal’s “Plaintiffs’ Hot List” thirteen times and listed in The Legal 500 for ten consecutive years.
ATTORNEY ADVERTISING. © 2022 Bernstein Liebhard LLP. The law firm responsible for this advertisement is Bernstein Liebhard LLP, 10 East 40th Street, New York, New York 10016, (212) 779-1414. Prior results do not guarantee or predict a similar outcome with respect to any future matter.
Bernstein Liebhard LLP