LifeStance Health Group Inc. is tumbling after Nate Anderson’s Hindenburg Research released a report saying it’s betting against the provider of mental-health services.
Shares of the Arizona-based firm fell as much as 21% on Thursday before paring some of the loss to trade about 8% lower. The stock has declined nearly 30% this year.
The company, which has a market capitalization around $2.1 billion, has been under pressure over metrics including its clinician retention rate. On Tuesday, a judge in the US District Court for the Southern District of New York approved a deal that states LifeStance will pay $50 million to end a lawsuit that alleged it misled investors about its clinician retention rates ahead of its June 2021 initial public offering. The stock fell about 7% Tuesday.
Payment to settle litigation is a reason Hindenburg notes in its Thursday report assessing that LifeStance will need to raise cash imminently.
“Overall, we think LifeStance is a classic example of what happens when private equity meets a ‘hot’ healthcare sector: Massive debt fueling a grinding, metric-focused corporate culture resulting in worse quality of care for patients, a worse environment for clinicians and long-term losses for the average investor,” Hindenburg wrote in the report.
LifeStance didn’t immediately respond to requests for comment via email and phone.
The company has 4 buys, 4 holds and 1 sell rating with an average 12-month price target of $7.71, roughly 40% above where shares currently trade, according to data compiled by Bloomberg. The shares were down almost 70% since its public offering as of Wednesday’s close.
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