LifeStance Health Group (Nasdaq: LFST) is considering a disciplined approach to mergers and acquisitions for the remainder of 2025. Company leadership hinted at more tuck-in deals to expand its footprint in new markets.

Other deal activity could involve acquisitions related to digital therapeutics or specialty services, according to LifeStance CEO Dave Bourdon. He noted during LifeStance’s first quarter earnings call that any action related to M&A will be complementary, not a primary driver of growth.

The potential for M&A transactions was not reflected in assumptions for the second quarter of 2025, supplemental documents show.

“As we look out three to five years at the kinds of capabilities that we believe we’ll need, digital therapeutics or specialty services being another example, we will consider doing acquisitions in those areas if we feel that would further accelerate our strategy,” Bourdon said. “Again, we’d be disciplined about it and the math has to work.”

The Scottsdale, Arizona-based behavioral health outpatient provider appointed Bourdon as CEO back in February to support the acceleration of its merger and acquisition strategy. He was formerly the company’s chief financial officer. Now, that spot is filled by Ryan McGroarty.

By the numbers

The company achieved positive net income for the first time in its history during the first quarter of 2025, which Bourdon noted positions it well to achieve “full year positive net income in 2026.” Its income from operations was $1.6 million, with net income landing at $700,000.

Overall revenue increased by 11% to $333 million compared to revenue during the same quarter in 2024, which was $300.4 million.

First quarter growth was driven primarily by 10% higher visit volumes and 10% clinician growth. LifeStance added 152 new clinicians across its practices nationwide, now totaling 7,535.

The company’s strong first quarter of 2025 and deep payer partnerships allow LifeStance to anticipate stability in navigating economic headwinds or a potential recession.

Bourdon noted that cash pay providers are the first to feel the effects of consumers tightening purse strings due to economic uncertainty.

“Our commercially insured model provides greater stability for clinicians and greater affordability for patients, which could drive both clinician growth and patient demand for LifeStance,” Bourdon said. “In regard to our long-term view of the industry, we continue to expect increasing demand for mental health services, as well as a migration from cash pay to utilizing insurance.”

The company is sunsetting its stock-based incentive program for clinicians and replacing it with a cash bonus incentive program, a shift driven by clinician feedback.

“As a result of this change, we expect our stock-based compensation to decrease by roughly $10 million per year, beginning in 2026 and continuing over the next four years, as the existing tranches of clinicians assess these updates and reflect our continued emphasis on profitable growth and disciplined capital deployment,” McGroarty said.

As it looks ahead, LifeStance also plans to invest in a new EHR platform to improve operational efficiency, clinician experience and ultimately underlying business performance.

For the second quarter, LifeStance expects revenue to be between $332 million and $352 million. The company also anticipates the next quarter to be transitional, given that it will be the first full quarter to absorb the final rate decrease from the single outlier payer. However, it projects higher revenues to build in the back half of the year.

“We had disclosed that this would result in downward pressure on rates in the first part of 2025. The second quarter is the first full quarter in which we will be absorbing this impact,” McGroarty said. “We believe that sequentially, this will result in lower total revenue per visit, as well as lower center and adjusted EBITDA margin as a percentage of revenue, consistent with our prior messaging.”