NEW YORK, Aug. 15, 2022 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a class action lawsuit has been filed against LifeStance Health Group, Inc. (“LifeStance” or the “Company”) (NASDAQ: LFST) in the United States District Court for the Southern District of New York on behalf of investors who purchased or otherwise acquired LifeStance common stock pursuant and/or traceable to the Registration Statement and Prospectus issued in connection with LifeStance’s June 10, 2021 initial public stock offering (the “IPO”).
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.
The Complaint allege that the Company’s IPO registration statement failed to disclose the following material facts: (1) that the number of virtual visits clients were undertaking utilizing LifeStance was decreasing as the COVID-19 lockdowns were being lifted, thereby flatlining LifeStance’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 LifeStance’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 IPO’s registration statement and LifeStance 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, LifeStance’s business metrics and financial prospects were not as strong as the IPO’s registration statement represented.
Investors who purchased or otherwise acquired shares of LifeStance should contact the Firm prior to the October 11, 2022 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.
Please visit our website at http://www.gme-law.com for more information about the firm.
