TPG-Backed LifeStance Files for $100M IPO

LifeStance Health Inc. — a behavioral health provider backed by the private equity giant TPG Capital — is planning to go public. The company filed with the SEC last week detailing its intention to raise up to $100 million in an initial public offering (IPO).

Scottsdale, Arizona-based LifeStance is one of the nation’s largest outpatient mental health platforms, providing a comprehensive suite of services delivered both virtually and in-person. It has more than 3,300 mental health clinicians across more than 370 centers in 27 states.

It uses a tech-enabled delivery model to improve patient and clinician experiences and communication throughout the care process. Additionally, it works with primary care providers and payers to ensure its services are accessible and affordable.


In 2020, LifeStance was involved in one of the behavioral health industry’s largest deals, when TPG Capital invested $1.2 billion into the company to acquire a majority interest, joining existing investors Summit Partners and Silversmith Capital Partners. The transaction accounted for more than 92% of the deal value in the behavioral health sector for the first six months of 2020.

Last year, the company treated about 357,000 patients through 2.3 million visits, LifeStance reported in its S-1. Plus, in the 12 months ended March 31, 2021, the provider booked $447 million in revenue.

Growth playbook

Also of note is LifeStance’s steep growth trajectory: Since its founding in 2017, LifeStance has opened 120 de novo centers and completed 53 acquisitions. Plus, its total revenue increased from $219 million in fiscal year 2019 to $377.2 million in FY 2020 on a pro forma basis.


In its SEC filing, LifeStance said its “highly replicable playbook” allows the company to enter new markets and pursue multi-pronged growth.

“We typically identify new markets based on the core characteristics of patient population demographics, substantial clinician recruiting opportunities, untreated patient communities and a diverse group of payors,” LifeStance said in the S-1. “To enter new markets, we seek to open de novo centers or acquire high-quality practices with a track record of clinical excellence and in-network payor relationships. Once we enter a new market, our powerful organic growth engine drives our growth through de novo openings, center expansions, clinician recruiting and tuck-in acquisitions.”

The company said it plans to focus on continued expansion in existing and new markets where there’s an unmet need for services.

In terms of acquisitions, LifeStance looks for companies that align its mission and live up to its quality of care standards, making it “a partner of choice for smaller, independent practices.” It typically fully integrates acquirees into its operational and technology infrastructure within four to six months following acquisitions, according to the S-1.

Meanwhile, on the de novo front, centers typically break even within the first two to four months, pay back invested capital within 13 months and realize a two-times return on invested capital within 18 months on a center margin basis.

“On average, de novo centers with at least two years of operating history as of December 31, 2020 had $1.7 million in total revenue and $0.6 million, or 35%, in Center Margin for the twelve months ended December 31, 2020,” the company said in the filing.

From LifeStance’s S-1
From LifeStance’s S-1

Potential challenges

LifeStance’s tech-enabled delivery model aims to improve behavioral health access, affordability and outcomes, while also cutting overall health care costs. Its platform supports patients throughout their care journey, while also reducing administrative and care coordination burdens for clinicians. Additionally, LifeStance works with more than 2,100 primary care providers nationwide to drive referrals and integrate care, and it has more than 200 payor relationships to ensure its services are in-network.

“Our model is built to empower each of the healthcare ecosystem’s key stakeholders — patients, clinicians, payors and primary care physicians — by aligning around our shared goal of delivering better outcomes for patients and providing high-quality mental health care,” the company wrote in its S-1.

However, achieving that goal comes with challenges, which the company outlined in its filings with the SEC. For example, LifeStance warned potential investors that it may not continue to grow at the rates it has historically and that changes to existing regulations and reimbursement rates could hurt the business. Additionally, the company explained that its business model is highly dependent on working with partners not owned by LifeStance, which introduces a certain degree of risk.

“Our growth depends on our ability to open de novo centers,” the company added, noting that successful acquisitions are also important. “To the extent we are unable to successfully identify suitable locations or secure space or if our lessors are unable to obtain permits and complete construction in a timely manner, our growth may be negatively impacted.”

When it comes to staffing — a potential risk and common pain point industry-wide due to the nationwide shortage of behavioral health clinicians — the company seemed to express confidence in its ability to recruit and retain workers.

“We believe we are an employer of choice in mental health, allowing us to employ highly qualified clinicians,” the S-1 said. “Our success is demonstrated by our track record — in addition to the clinicians we have gained through our acquisitions, since our inception in March 2017 through December 31, 2020, we have hired 1,746 clinicians through our subsidiaries and affiliated practices with a clinician retention rate of over 87% compared to the industry average of 77%.”

LifeStance plans to list on the Nasdaq under the stock symbol LFST. The company has yet to disclose any pricing terms.

When Behavioral Health Business reached out to LifeStance for this story, the company declined to comment.

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