What happened
Shares of LifeStance Health Group (LFST -0.29%), 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 11.64%) 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.
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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.
