What changed in this filing

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Item 1. Business

2025-02-27 compared with 2024-02-28 · 60 added, 68 removed, 411 unchanged (24% of the section changed)

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• Lack of Access:

Despite this large burden, access to mental health treatment is plagued by significant challenges.

Despite the large burden of mental illness in the U.S., access to mental health treatment is plagued by significant challenges.

Of patients with serious mental illness not receiving care in the past year, 29% reported that they did not know where to go for services, suggesting issues related to access.

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• Lack of Affordability :

The mental healthcare market remains highly fragmented, forcing patients to pay cash out-of-pocket for treatment and, therefore, reducing the likelihood that patients will receive treatment.

The mental healthcare market remains under-reimbursed by commercial and government insurers, resulting in many clinicians only accepting cash pay for mental health services.

The need to pay cash out-of-pocket for treatment reduces the likelihood that patients will receive treatment.

Of patients with serious mental illness not receiving care in the past year, 46% reported that they could not afford the cost of treatment, and an additional 19% reported that their health insurance did not pay enough for mental health services.

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A corresponding lack of resources to invest in infrastructure and technology exacerbates these burdens, even as growing regulatory and compliance requirements increase the need for them.

This lack of technology further constrains access issues—for example, through limited or no virtual capabilities—while impeding the ability to effectively track patient data and outcomes as needed to ensure care is being delivered effectively.

This lack of technology further constrains access—for example, through limited or no virtual capabilities—while impeding the ability to effectively track patient data and outcomes as needed to ensure care is being delivered effectively.

• Lack of Care Coordination:

Many primary care physicians and specialists are not well-equipped to identify and treat patients with mental health conditions, resulting in many patients receiving treatments only once their condition has been exacerbated or not receiving treatment at all.

Many primary care physicians and specialists are not well-equipped to identify and treat patients with mental health conditions, resulting in patients receiving treatments only once their condition has been exacerbated or not receiving treatment at all.

This limited access to treatment has a significant social and economic impact.

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We developed powerful incentives for each of our stakeholders—patients, clinicians, payors and primary care and specialist physicians—to align with our mission, adopt our platform and drive our

We estimate that there are over 50 million patients in the United States with a mental health issue that our clinicians could address.

We estimate that there are nearly 60 million adults in the United States with a mental health issue that our clinicians could address.

We Provide Patients Access to Convenient, Affordable, High-Quality Care

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We Empower Clinicians to Improve the Lives of Their Patients

We empower clinicians to focus on patient care and relationships by providing what we believe is a superior workplace environment, as well as clinical and technology capabilities to deliver high-quality care.

We empower clinicians to focus on patient care and relationships by providing what we believe is a superior workplace environment, as well as clinical and technological capabilities to deliver high-quality care.

We offer a unique employment model for clinicians in a collaborative clinical environment—with clinicians employed by our subsidiaries and supported practices—and we improve patient access through in-network payor contracts and primary care and specialist physician referrals.

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We have national and regional payor relationships, which improve access and affordability for our patients.

Our in-network patients can seek initial mental health screening, clinical treatment and subsequent therapy or follow-up as needed in a timely manner appropriate for their needs.

Our in-network patients can seek initial mental health screening, clinical treatment and subsequent therapy or follow-up as needed in a timely and affordable manner appropriate for their needs.

Our Clinicians Are Empowered to Focus on Improving the Lives of Their Patients

We deliver value to our clinicians through our "Seven Points of Value" clinician value proposition:

We deliver value to our clinicians through our clinician value proposition, which includes:

• Mission-driven culture:

Our platform enables our clinicians to focus on delivering the best possible care to their patients.

We augment their ability to serve their patients through technology tools and data, while freeing them from the many non-clinical burdens they face in independent practice.

We augment their ability to serve their patients through technology tools and data, while freeing them from the many non-clinical burdens they face in independent practice, so that they can dedicate their time and energy to providing high-quality care to their patients.

• Collegial and collaborative:

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Our clinicians are employed as W-2 employees by our subsidiaries and supported practices rather than as independent contractors, the latter of which we believe is more common in the mental healthcare industry in the United States.

Additionally, we offer a flexible visit-based economic model, which allows our clinicians to build their patient panels while flexibly managing caseloads in line with clinicians’ personal preferences.

• Ownership mentality :

We believe investing in our talent in human capital is paramount.

Under our employee equity incentive program, we make grants to eligible employees, including clinicians.

For clinicians, eligibility for equity awards and vesting are tied to productivity, directly serving our mission of expanding access to mental healthcare.

We believe our equity program boosts our value proposition in a highly competitive labor market, can help attract and retain the talent needed for our patient-centric business model, and promotes an ownership mindset among our employees, including our clinicians.

Just as critically, it aligns with our values and purpose and builds on a history of investment in

our team by providing meaningful rewards for furthering our mission of enhancing access to mental healthcare in a sustainable manner over the long term.

Additionally, we offer a flexible visit-based economic model, which allows our clinicians to build their patient panels while flexibly managing caseloads.

Our Payor Partners Expand Access and Lower Costs

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• Access to a national clinician employee base:

We deliver a scaled and comprehensive mental healthcare offering with an appropriate mix of psychiatric and therapeutic expertise to offer to their members and employer clients.

We deliver a scaled and comprehensive multidisciplinary mental healthcare offering with an appropriate mix of psychiatric and therapeutic expertise for payors to offer to their members and employer clients.

• Lower total medical costs:

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• Stronger member and client value proposition:

We believe our clinicians provide best-in-class mental health treatment services and experience, which enables payors to provide to their members a superior product.

We believe our clinicians provide best-in-class mental health treatment services and experience, which enables payors to provide to their members a superior experience.

Because mental health conditions can lead to employee absenteeism and lower productivity, we believe our payor partners are also well-positioned to deliver value to their employer clients.

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We offer our primary care and specialist partners a diverse group of mental health clinicians to which they can refer their patients, allowing their patients to receive high-quality, evidence-based care covering their mental and physical health needs.

As we scale nationally, large provider groups can partner with us to streamline their mental health referrals.

By gaining access to our extensive team of clinicians, primary care and specialist physicians can more easily and consistently connect patients with the care they need.

Large provider groups can partner with us to streamline their mental health referrals and receive visibility into the status of their patients once they are referred.

By gaining access to our extensive team of clinicians, primary care and specialist physicians feel more comfortable screening for and identifying mental health conditions and can more easily and consistently connect patients with the care they need.

• Enable more integrated care and lower costs:

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Our Growth Strategies

We believe we are well positioned to sustain our strong track record of growth and accomplish our mission to reimagine mental healthcare in the United States.

To achieve this, we are anchored on our vision to deliver the highest-quality care for our patients and our value proposition to our key stakeholders.

We believe we are well positioned to sustain our strong track record of growth and to reimagine mental healthcare in the United States.

To achieve this, we are anchored on delivering the highest-quality care for our patients and our value proposition to our key stakeholders.

Highly Scalable Platform with Proven Growth Playbook

To drive growth in our clinician base, we have developed an in-house clinician recruiting model that is built on our compelling clinician value proposition.

We believe our guiding principle of creating a national platform built with a patient and clinician focus makes us the partner of choice for smaller, independent practices.

We believe our guiding principle of creating a national platform built with a patient and clinician focus has made us the partner of choice for smaller, independent practices.

In addition to expanding existing and acquiring practices, we open de novo centers in certain markets to provide physical locations for our clinicians to deliver on our hybrid model of in-person or virtual care.

From our inception through December 31, 2023, we have successfully opened 351 de novo centers and completed 93 acquisitions of existing practices.

Expand and Optimize Our Presence in Existing Markets

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Our unified technology and operational platform is also highly scalable, helping us sustain our rapid growth.

In connection with our expansion through de novo centers and acquisitions, in 2023, we announced a strategic re-focus, to prioritize resources and close certain centers as a direct result of changes to our business model driven by a shift to more virtual visits initiated by the COVID-19 pandemic.

As a result, we have completed a significant reduction in physical space and exited several

underoccupied offices by both negotiating terminations of and abandoning certain real estate leases, and plan to continue to optimize our real estate footprint in 2024.

As a result, we have completed a significant reduction in physical space and exited several underoccupied offices by both negotiating terminations of and abandoning certain real estate leases, and plan to continue to optimize our real estate footprint on a go-forward basis as part of our recurring operations.

Enter into New Markets

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We serve all patient demographics—children, adolescents, adults and geriatrics.

Patients have seamless access to our team of licensed mental health clinicians, including psychiatrists, APNs, psychologists and therapists.

Patients have seamless access to our multidisciplinary team of licensed mental health clinicians, including psychiatrists, APNs, psychologists and therapists.

Our breadth of clinical capabilities facilitates coordination across psychiatric and psychotherapy treatment modalities, limiting the need to refer patients externally as their needs are met within our comprehensive service offerings.

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local time, with some open on Saturdays.

Each de novo center offers a comprehensive clinical care team of clinicians offering psychiatric and psychotherapy services.

Each of our centers offers a comprehensive clinical care team of clinicians offering psychiatric and psychotherapy services.

We aim to provide a superior in-person patient experience.

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Our teams negotiate, implement and manage new payor relationships, drive regional rate improvement and advance key initiatives.

To expand this network and grow access to covered patients, we continue to evaluate new payor relationships and national contracts where we believe the payor's policies and approach to mental healthcare align with our mission while also seeking to drive regional rate improvement, including terminating certain of our lower-volume payor contracts, to support continued investment in our differentiated model for delivering mental healthcare.

To expand this network and grow access to covered patients, we continue to evaluate new payor relationships and national and regional contracts where we believe the payor's policies and approach to mental healthcare align with our mission while also seeking to drive regional rate improvement, including terminating certain of our lower-volume payor contracts, to support continued investment in our differentiated model for delivering mental healthcare.

Two payors individually exceeded 10% of our total revenue for the year ended December 31, 2024:

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Our contracts with payors are generally fee-for-services arrangements.

Currently, only a small portion of our contracts

provide for incremental payments tied to the attainment of quality or performance metrics, and such payments comprised an immaterial portion of our revenue during the period.

Currently, only a small portion of

our contracts provide for incremental payments tied to the attainment of quality or performance metrics, and such payments comprised an immaterial portion of our revenue during the period.

Our Physician Relationships

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Certain of our entities and supported practices are covered entities, while our management service entities are business associates.

Additionally, tracking technologies generally used to collect and analyze information about user behavior and enhance the user experience may qualify as HIPAA violations and result in sanction.

The Office for Civil Rights ("OCR") recently issued a proposed rule in April of 2023 to modify existing standards permitting uses and disclosures of PHI when PHI pertains to reproductive healthcare, which is defined broadly.

Additionally, under guidance from the Department of Health and Human Services Office for Civil Rights (“OCR”), deploying online tracking technologies generally used to collect and analyze information about user behavior and enhance the user experience may, under certain circumstances, constitute an impermissible disclosure of PHI under HIPAA and result in liability.

The OCR also finalized a rule in April of 2024 modifying existing standards permitting uses and disclosures of PHI when PHI pertains to reproductive healthcare, which is defined broadly.

Violations of HIPAA may result in civil and criminal penalties.

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We must comply with such laws in the states where we do business in addition to our obligations under HIPAA.

In some states, such as California, state privacy laws are even more protective than HIPAA.

It may sometimes be necessary to modify

our operations and procedures to comply with these more stringent state laws.

State data privacy and security laws are subject to change, and we could be subject to financial penalties and sanctions if we fail to comply with these laws.

In some states, such as California and Washington, state privacy laws are even more protective than HIPAA.

It may sometimes be

necessary to modify our operations and procedures to comply with these more stringent state laws.

State data privacy and security laws are subject to change and exist in more than 20 states, and we could be subject to financial penalties and sanctions if we fail to comply with these laws.

Part 2 and Other Privacy Laws

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As such, the penalties for Part 2 violations have increased, rising from up to $5,000 for individuals and $10,000 for organizations on a per-violation basis to a $50,000 maximum penalty for failure to comply with the Part 2 requirements and a $250,000 maximum penalty for wrongful disclosure of individually identifiable health information.

In addition to federal and state laws protecting the privacy and security of personal information, we may be subject to other types of federal and state privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security, along with laws that impose specific requirements on certain types of activities, such as data security and texting.

In addition to federal and state laws protecting the privacy and security of personal information, we may be subject to other types of federal and state privacy and consumer protection laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security, along with laws that impose specific requirements on certain types of activities, such as data security and texting.

In recent years, there have been a number of well publicized data breaches involving the improper use and disclosure of PII and PHI.

Many states have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials and provide credit monitoring services and/or other relevant services to impacted individuals.

Many states have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and all 50 states require certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and state officials and, in some states, provision of credit monitoring services and/or other relevant services to impacted individuals.

In addition, under HIPAA and pursuant to the related contracts that we enter into with our clients who are covered entities, we must report breaches of unsecured PHI to our clients following discovery of the breach.

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All merchants and service providers that store, process and transmit payment card data are required to comply with PCI DSS as a condition to accepting credit cards.

We must implement certain data security measures and are subject to annual reviews to ensure compliance with PCI standards worldwide and are subject to fines if we fail to maintain a valid certificate or are otherwise are found to be non-compliant.

We must implement certain data security measures and are subject to annual reviews to ensure compliance with PCI standards worldwide and are subject to fines and other penalties if we fail to maintain a valid certificate or are otherwise are found to be non-compliant.

Federal and State Fraud and Abuse Laws

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Federal Anti-Kickback Statute

We are also subject to the federal Anti-Kickback Statute, which, subject to certain exceptions known as “safe harbors,” prohibits the knowing and willful offer, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration, in cash or in kind, in return for, or to induce, the (1) the referral of a person covered by government healthcare programs, (2) the furnishing or arranging for the furnishing of items or services reimbursable under government healthcare programs, or (3) the purchasing, leasing, ordering, or arranging or recommending the purchasing, leasing, or ordering, of any item or service reimbursable under government healthcare programs.

Federal courts have held that the Anti-Kickback Statute can be violated if just one purpose of a payment is to induce

Federal courts have held that the Anti-Kickback Statute can be violated if just one purpose of a payment is to induce referrals.

Actual knowledge of this statute or specific intent to violate it is not required, which makes it easier for the government to prove that a defendant had the state of mind required for a violation.

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The failure of a financial relationship to meet all of the applicable safe harbor criteria does not necessarily mean that the particular arrangement violates the Anti-Kickback Statute, but business arrangements that do not fully satisfy all elements of a safe harbor may result in increased scrutiny by OIG and other enforcement authorities.

We expect the HHS OIG to issue new regulations adding and modifying safe harbors and to issue new fraud alerts covering the latest conduct that OIG finds problematic.

Violations of the Anti-Kickback Statute can result in exclusion from government healthcare programs as well as civil and criminal penalties, including fines of $124,732 per violation (as of 2024, and subject to periodic adjustments for inflation) and three times the amount of the unlawful remuneration.

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Although we believe that our arrangements with physicians and other referral sources comply with current law and available interpretative guidance, as a practical matter, it is not always possible to structure our arrangements so as to fall squarely within an available safe harbor.

Additionally, we expect the OIG to issue new regulations adding and modifying safe harbors and to issue new fraud alerts covering the latest conduct that OIG finds problematic.

Additionally, we expect the OIG to issue new regulations adding and modifying safe harbors and to issue new fraud alerts covering the latest conduct that OIG finds problematic, having published a notification of intent to develop regulations and request for public comment on November 27, 2024.

False Claims Act

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In addition, the Civil Monetary Penalties Law imposes civil administrative sanctions for, among other violations, (1) inappropriate billing of services to government healthcare programs, (2) employing or contracting with individuals or entities who are excluded from participation in government healthcare programs, and (3) offering or providing Medicare or Medicaid beneficiaries with any remuneration, including full or partial waivers of co-payments and deductibles, that are likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier (subject to an exception for non-routine, unadvertised co-payment and deductible waivers based on individualized determinations of financial need or exhaustion of reasonable collection efforts).

Protections against surprise billing have also been promulgated in connection with the Consolidated Appropriations Act of 2021, which introduced the “No Surprises Act.” Becoming effective on January 1, 2022, this rule created new protections against surprise billing and excessive cost sharing for health care consumers and creates a dispute resolution process to rectify cost disparities.

Protections against surprise billing have also been promulgated in connection with the Consolidated Appropriations Act of 2021, which introduced the “No Surprises Act.” Becoming effective on January 1, 2022, this rule created new protections against surprise billing and excessive cost sharing for healthcare consumers and creates a dispute resolution process to rectify cost disparities.

State Healthcare Competition and Planning Laws

Several states in which we operate have adopted competition and healthcare planning laws that affect transactions in the healthcare industry, which are becoming more in-depth and time-consuming.

Some states require notification, filings, and/or

approvals by state agencies with respect to proposed transactions involving healthcare providers.

Several states in which we operate—including California, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New York, Oregon and Washington—have adopted competition and healthcare planning laws that affect transactions in the healthcare industry,

which are becoming more in-depth and time-consuming.

Some states require notification, filings, and/or approvals by state agencies with respect to proposed transactions involving healthcare providers.

Such processes can take significant time, require filing fees, result in conditions that require certain operational changes, and include regular annual reviews regarding the cost and quality of services, among other topics.

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At LifeStance, we are committed to building a culture that prioritizes our employees' wellbeing and represents our values:

• Delivering Compassion - we care for people unconditionally and act with empathy always

• Building Relationships - we are collaborative, building enduring relationships to achieve more together

• Celebrating Difference - we respect the diversity of every individual's lived experiences

We cultivate a space where everyone can show up as their authentic self.

We are all accountable for doing the right thing—even when it's hard—because we know it's worth it.

We seek out diverse perspectives and listen to learn without judgment.

We realize our full potential when we work together towards our shared purpose.

As of December 31, 2024, we employed approximately 10,218 employees through our subsidiaries and supported practices, of which 4,205 were directly employed through our subsidiaries and 6,013 were directly employed by our supported practices.

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Building a Purpose-Driven Culture

As part of our goal to create an industry-leading organization that maintains a culture aligned with our mission, vision and values, we implemented a new employee engagement survey in 2023.

These pulse surveys were designed to ensure that we are continually measuring and improving engagement and employee satisfaction via data-driven insights.

As part of our goal to become the mental health employer of choice, we regularly solicit feedback from our employees via a twice a year employee engagement survey.

These engagement surveys were designed to ensure that we are fostering a culture where employees are empowered to do their best work.

According to our most recent engagement survey, employees consistently report that LifeStance provides a purpose-driven environment where they feel a strong connection to their work and believe what they do at LifeStance is meaningful.

They have a strong sense of camaraderie and a positive working relationship with members of their teams.

Further, our employees feel they are treated with respect and dignity across all levels of the organization.

They also feel strongly supported by their people managers and empowered to succeed in their roles.

Employee Health and Wellness

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To support financial wellness, we offer a 401(k) plan under which we match up to 100% of contributions on the first 3% of an employee's eligible earnings, and up to 50% on the next 2% of eligible earnings.

We also continue to offer an industry-leading long-term incentive plan for eligible LifeStance clinicians and employees to earn stock awards as an incentive for increasing access to mental healthcare.

We believe providing a path to ownership in LifeStance is a differentiated benefit for our clinicians and other eligible employees.

We also continue to offer an industry-leading long-term incentive plan for eligible LifeStance employees to earn stock awards as an incentive for increasing access to mental healthcare.

We believe providing a path to ownership in LifeStance is a differentiated benefit for our eligible employees.

Diversity, Equity, Inclusion and Belonging

Our National Diversity, Equity, Inclusion and Belonging ("DEIB") Committee is guided by the vision of fostering a workplace in which individuals of all backgrounds are welcomed by a culture of inclusion and respect.

Our National DEIB Committee is focused on education, cultural humility, celebrating difference and taking effective action to ensure every staff member and patient under our care understands that LifeStance is a safe place for them to be their authentic selves.

Members of the committee partner closely with leadership to make recommendations and provide policy guidance to ensure that the pillars of DEIB are represented across the organization.

Training, Education and Development

Our National Diversity, Equity, Inclusion and Belonging ("DEIB") Committees are guided by the vision of fostering a workplace in which individuals of all backgrounds are welcomed by a culture of inclusion and respect.

Our National DEIB Committees are focused on education, cultural humility, celebrating difference and taking effective action to ensure every staff member and patient under our care understands that LifeStance is a safe place for them to be their authentic selves.

Members of the national committee partner closely with leadership to make recommendations and provide policy guidance to ensure that the pillars of DEIB are represented across the organization.

Local committees ensure that we bring our core values of belonging to life at the practice-level and foster inclusion across the organization.

Learning and Development

We are committed to providing ongoing professional development opportunities for all LifeStance employees.

In addition to offering live clinical workshops and trainings that are open to all colleagues across the organization, employees can access a wide variety of training, education and development opportunities on The Trailhead, LifeStance's learning management system.

In addition to offering live continuing education opportunities, employees can access a wide variety of training, education and development opportunities, including unconscious bias training and leadership development courses, on our HRIS platform.

Sustainability

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SUSTAIN high performance sustainable ceiling systems;

Resilient Floor Covering Institute (RFCI) industry average Environmental Product Declaration flooring;

Resilient Floor Covering Institute industry average Environmental Product Declaration flooring;

Environmental Product Declaration Certified wall base;

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We generate lower revenue and experience lower clinician productivity in periods that have fewer business days than other periods.

We measure productivity by the number of visits that are performed by a clinician, which is driven by the amount of time clinicians make available to see patients and our ability to fill clinician's schedules by attracting new patients, scheduling patients, and converting scheduled appointments to completed visits also impacts our ability to generate revenue.

Further, clinician productivity also impacts clinician compensation, as clinician compensation is primarily driven by the number of visits provided by each clinician.

We measure productivity by the number of visits that are performed by a clinician, which is driven by the time clinicians make available to see patients and our ability to fill clinician's schedules by attracting new patients, scheduling patients, and converting scheduled appointments to completed visits.

Clinician productivity impacts our ability to generate revenue and also impacts clinician compensation, as clinician compensation is primarily driven by the number of visits provided by each clinician.

Recruiting new clinicians and retaining existing clinicians enables us to see more patients by expanding our patient visit capacity.

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was incorporated in the state of Delaware.

Our principal executive offices are located at 4800 N.

Our principal executive office is located at 4800 N.

Scottsdale Road, Suite 2500, Scottsdale, Arizona 85251.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business