#20 LifeStance: A tale of Private Equity, M&A, lawsuits, and short sellers

Hi friends,

Let’s play a game…

Can you guess the mental health business from these stats?

• 7,000 Clinicians

• $2.6bn valuation

• $1bn revenue in 2023

• 6% Adj. EBITDA Margin in 2023

It’s not Spring, Grow or Alma.

It’s not Talkspace or Lyra either. 

It’s a company called LifeStance, a US based mental health provider that has been traded as a public company since 2021. And a lot of people have never heard of it.

Before I started diving into this company, I had no idea how interesting their story is. 

They’ve acquired nearly 100 mental health practices, grown to over a billion in revenue, been involved in a $50m lawsuit settlement and are now the target of a short selling campaign by Hindenburg Research.

Wild.

“Wait” you say, “aren’t LifeStance just a traditional mental health provider? I thought this newsletter was for people building startups and innovative new businesses.”

Well, you are right.

But don’t you want to understand what one of the biggest players in the entire US mental health system is doing?

Don’t you want to see what their financials look like and learn from their successes and failures? What’s more, it’s these big guys that often offer partnership or even acquisition opportunities to startups like yours.

I promise you, I wouldn’t write about it (and spend dozens of hours researching it) if I didn’t think it was helpful…

As usual, I’ve been knee deep in their S-1, quarterly reports, investor presentations and pretty much every piece of content I could find about this company. They’re a major player in the US mental health system and today, I share everything I’ve learned.

We’ll discuss;

1. The LifeStance origin story: The thesis and Private Equity funds behind this business

2. Hypergrowth: how they went from zero to over a billion dollars in revenue in eight years

3. Shift to Sustainability: How LifeStance pivoted towards profitability, what their financial performance looks like today and what we can learn from it 

4. Bear Case: Why Hindenburg Research are shorting LifeStance

5. The Future: The long term strategy for LifeStance

Let’s get into it!

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