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Why LifeStance Health Group Stock Is Crashing Today

By Cory Renauer – Aug 12, 2021 at 12:22PM

Key Points

  • LifeStance Health reported second-quarter earnings after the bell closed on Wednesday.
  • A wider-than-expected net loss and soft growth expectations in the earnings report were a big disappointment.

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The mental health service provider surprised investors with heavy operating losses.

What happened

Shares of LifeStance Health Group (LFST 2.88%), a provider of mental health services, were tanking today in response to a disappointing second-quarter earnings report. The stock was down 47.3% as of 11:57 a.m. EDT on Thursday.

So what 

Mental health services have been one of Teladoc Health's (TDOC 0.69%) strongest growth drivers over the past several quarters. As a focused provider of in-person and online mental health services, investors were expecting a strong performance from LifeStance Health after it raised over $800 million in an IPO this June.

A distraught-looking woman holding her temples while looking at a computer.

Image source: Getty Images.

During the first three months of 2021, LifeStance Health's operations lost less than $1 million after bringing in $143 million in top-line revenue. The stock is tanking today partly because second-quarter revenue that rose just 12% sequentially to an annualized $642 million didn't keep pace with operating expenses that surged 44% over the same period. 

Now what

LifeStance Health also disappointed investors with soft guidance for the second half of 2021. Management told investors to expect top-line revenue to reach $668 million to $678 million.

LifeStance Health used a large chunk of its IPO proceeds to pay down existing debts. As a result, there was just $276 million in cash and cash equivalents on its balance sheet at the end of June. With this in mind, it's probably a good idea to watch this company's story play out from a safe distance.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.

Stocks Mentioned

LifeStance Health Group, Inc. Stock Quote
LifeStance Health Group, Inc.
LFST
$5.71 (2.88%) $0.16
Teladoc Health Stock Quote
Teladoc Health
TDOC
$29.20 (0.69%) $0.20

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