LifeStance Health valued at over $ 7 billion as shares surge after IPO

LifeStance Health, one of the nation’s largest virtual and in-person ambulatory mental health care providers, soared in its commercial debut after raising $ 720 million in its initial public offering.

Shares of the company, which is backed by private equity giant TPG Capital, was trading at $ 25.34 on Tuesday, up 40% from the IPO price of $ 18 per share set on the 9th. June.

Other investors in the company include Summit Partners and Silversmith Capital Partners.

The company is listed on the Nasdaq Stock Exchange under the symbol “LFST”.

After the IPO, TPG, Summit Partners and Silversmith Capital Partners will form a block holding 66% of the shares of LifeStance.

The company’s shares jumped more than 11% when they debuted on the Nasdaq on June 10, giving the therapy provider a market value of nearly $ 7.5 billion, Yahoo Finance reported.

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LifeStance said it sold 40 million shares above the previous target range of $ 15 to $ 17 per share, raising $ 720 million. Of the shares sold, 32.8 million were offered by LifeStance and about 7.2 million by existing investors in the company.

The company intends to use the net proceeds of the IPO to repay outstanding amounts on its existing debt and for general corporate purposes, including working capital, operating expenses and expenses. fixed assets.

LifeStance’s outsized IPO underscores demand for mental health services during the COVID-19 pandemic.

“LifeStance has been on the same growth trajectory, before COVID, during COVID and after COVID,” Danish Qureshi co-founder and chief growth officer told Fierce Healthcare.

“What’s unique about our model is that we offer a hybrid model of care that does not take into account whether the services are delivered in person or by telemedicine. We have built a platform that allows patients to seek care in the setting that works best for them and that helps lower barriers to care, ”said Qureshi. “It is important to increase access to mental health services for all who need them in the country.

LifeStance, founded in 2017, operates 370 centers and employs 3,300 psychiatrists, advanced practice nurses, psychologists and therapists in 27 states. The company served 2.3 million patients in 2020. The company provides virtual and in-person ambulatory mental health care to children, adolescents and adults with various mental health issues, including depression, anxiety disorders, schizophrenia and post-traumatic stress disorder.

LifeStance clinicians provide networked psychiatry and therapy services and accept most forms of commercial insurance, dramatically improving patient access to high quality behavioral health care.

Total revenue for the Scottsdale, Ariz.-Based company increased from $ 100.3 million in 2018 to $ 212.5 million in 2019 and rose again to $ 377.2 million in 2020 on a pro forma basis.

Qureshi said company executives have decided now is the time to publicize access to mental health care on a larger scale and invest in the technology and growth of LifeStance.

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“We want to invest in technology to grow our telehealth offering and ensure that we always provide a top-notch experience for patients and clinicians. We also want to invest in continued growth to be in other geographies and more cities. and states to take this path to be fully national and open access to healthcare in the 50 states. It also supports our long-term vision of having a fully integrated model of care for mental health care, ”he said.

The IPO also allows the company to endow the LifeStance Health Foundation, a separate nonprofit focused on young people, underrepresented communities, and underemployed or uninsured people, Qureshi said. Additional investments will allow the foundation to provide grants, award scholarships, and support organizations that can reach even more patients.

Mental illness is a huge and growing crisis. In 2019, 1 in 5 adults in the United States lived with a mental illness.

LifeStance estimates that the market will nearly double from 2020 to 2025 at a compound annual growth rate of 14% to approximately $ 215 billion, driven by strong long-term favorable winds, including increased incidence of mental illnesses, growing awareness and acceptance of driving demand treatment, increased access and continued integration with physical care and support for federal and state regulations.

Investors are investing heavily in the mental health sector as the COVID-19 pandemic sheds light on behavioral health issues. Online therapy app Discussion space plans to go public through a merger with specialist acquisition firm Hudson Executive Investment Corp. The deal values ​​Talkspace, which connects users to licensed therapists via video chat or text, at $ 1.4 billion, including debt. The deal will provide the company with $ 250 million in cash to use as growth capital, the company said in January.

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“Investors recognize the need to continue investing in healthcare and providing innovative models to increase access and reduce barriers for patients, and especially in mental health,” Qureshi said. “It’s something that is a priority for the whole country because of the pandemic, but there has been this gradual trend of reducing the stigma surrounding receiving mental health services and raising awareness so people can asking for care. We now really have smart dollars stepping into that space and helping companies like ours innovate, and the people who win are the patients. “

There is a growing list of companies entering the mental health space by offering mobile apps and virtual-only services.

“We absolutely believe there is room for companies that focus on the virtual-only subset of the market and offer self-service treatment to patients through apps or that focus on patients who want receive care exclusively online. There is a place for it. “said Qureshi.” At LifeStance, we truly believe in a model that empowers patients to access care, where and when they want it and regardless of the path. This creates a point of differentiation for LifeStance because we are not exclusively in person and we are not trying to tackle a very complex health problem by providing health care services almost exclusively.

Morgan Stanley, Goldman Sachs & Co. LLC, JPMorgan and Jefferies are acting as lead bookrunners for the offering. TPG Capital BD, LLC, UBS Investment Bank and William Blair are also acting as associate bookrunners for the offering, and Capital One Securities, AmeriVet Securities, Drexel Hamilton, R. Seelaus & Co., LLC and Siebert Williams Shank are acting as co-managers for the offer.

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