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LifeStance Health Group – A successful business model in the time of COVID-19

LifeStance IPO on Nasdaq - Photo:

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Now LifeStance Health Group Inc. has become one of the largest outpatient mental health service providers in the United States.In the context of the COVID-19 epidemic causing many businesses to struggle, therapy provider LifeStance Health Group Inc has been quick to grasp the increased demand for healthcare services during the COVID-19 pandemic to business model development.

In June 2021, LifeStance had a successful initial public offering (IPO) on Nasdaq, with the share price increasing by more than 11% on the first day of the offering (June 10). bringing the market value of this business to nearly 7.5 billion USD. Opening the trading session on June 10, LifeStance’s share price increased to 20 USD/share, higher than the initial public offering price of 18 USD/share. In afternoon trading, LifeStance’s share price was up nearly 18 percent.

LifeStance said it sold 40 million shares and raised $720 million. Of the shares sold, 32.8 million shares were offered by LifeStance and the remaining 7.2 million shares were offered by the company’s existing investors. Morgan Stanley, Goldman Sachs, JP Morgan and Jefferies are the main underwriters of LifeStance’s IPO.

LifeStance’s IPO comes amid the outbreak of the COVID-19 pandemic that has plunged millions of people around the world into disease, death, isolation and poverty. Health professionals are also concerned about the high risk of mental disorders among COVID-19 survivors. LifeStance CEO Michael Lester notes there has been a mental health crisis for a long time. Meanwhile, before the COVID-19 pandemic broke out, the US also had a shortage of mental health service providers.

Founded in 2017, LifeStance provides online mental health care and one-on-one care for children, adolescents and people with mental health issues such as depression, anxiety disorder, schizophrenia…

Headquartered in Scottsdale, Arizona, LifeStance employs more than 3,300 psychiatrists, paramedics, psychologists and therapists and operates 370 centers in 27 US states. In 2020, LifeStance welcomed 2.3 million patients, a sharp increase from 1.4 million patients at the end of 2019. Director Lester said that the COVID-19 epidemic caused LifeStance to build a model. combined online and in-person treatment.

According to financial filings, more than 90% of LifeStance’s revenue comes from policies with more than 200 health insurers, and about 37% of LifeStance’s revenue comes from two of the largest U.S. insurers. UnitedHealthcare and Anthem. Under the impact of the COVID-19 epidemic, corporate customers (using a large number of employees) of insurance companies have emphasized the benefits of mental health care for their employees and here is also an opportunity for LifeStance to grow.

Given the fact that about 95% of mental health providers are single practitioners, contracting with LifeStance becomes attractive to insurers. As a result, LifeStance opens a new office every 4.5 days. Lester emphasized that the business is rapidly expanding its business to meet rising demand and help provide more reliable mental health care nationwide.
LifeStance’s long-term goal is to build a fully integrated care model. In addition, LifeStance is also eyeing government-funded healthcare markets, following the severe impact of the COVID-19 epidemic.

For 2020, LifeStance reported revenue of $377.2 million and a net loss of $270.9 million. However, in the first three months of 2021, this business’s revenue doubled from last year to 143.1 million USD.
Global financial investment group TPG acquired a majority stake in LifeStance in May 2020 with a 48.2% stake, while Summit Partners and Silversmith Capital Partners continue to hold a minority stake. (18%).

A statistic shows that venture capitalists poured more than $1.5 billion into mental health startups in 2020. This metric proves the attractiveness of entrepreneurs. The health care industry for investors during the COVID-19 pandemic has not shown any signs of ending.

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