©Reuters. LifeStance Health Group (LFST) collapses after Hindenburg research failure
Shares of mental health company LifeStance Health Group, Inc. (LFST) fell Thursday after Hindenburg Research said it was short the company.
Hindenburg said in his research note that he believes “LifeStance is a classic example of what happens when private equity meets a ‘hot’ healthcare sector.”
LFST shares are currently down more than 8%, trading around the $5.50 mark.
The short-selling firm claims LFST’s massive debt is fueling a crisis, while its “metric-focused corporate culture [is] resulting in worse quality of care for patients, a worse environment for doctors, and long-term losses for the average investor.”
Hindenburg said LFTS trades at a premium of about 23% to its behavioral health peers, despite reporting losses over the past 12 months in its third-quarter 2023 report.
“We assess that LifeStance will need to raise cash shortly given its latest Q3 ’23 results,” Hindenburg says.