LifeStance Health Group, Inc. 10-K

Item 9A . Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Annual Report. Based upon that evaluation, as a result of the material weaknesses in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2024 due to the material weaknesses described below. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our management, with the participation of our Chief Executive Officer and Chief Financial Officer and the oversight of our audit committee, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2024. In assessing the effectiveness of our internal control over financial reporting, our management used the framework established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that assessment and due to the material weaknesses described below, our management has concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2024. 52 A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses we identified were as follows: We did not design and maintain an effective control environment commensurate with our financial reporting requirements due to an insufficient complement of resources in the accounting/finance and IT functions, with an appropriate level of knowledge, experience and training. This material weakness contributed to the following additional material weaknesses: • We did not maintain formal accounting policies and procedures, and did not design and maintain effective controls related to significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over account reconciliations, segregation of duties and the preparation and review of journal entries. These material weaknesses resulted in material misstatements related to the identification and valuation of intangible assets acquired in business combinations that impacted the classification of intangible assets and goodwill, related impacts to amortization and income tax expense, and the restatement of our previously issued annual consolidated financial statements as of and for the years ended December 31, 2019 and 2018 with respect to such intangibles assets acquired in business combinations. Additionally, these material weaknesses could result in a misstatement of substantially all of the financial statement accounts and disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected. • We did not design and maintain effective controls over IT general controls for information systems that are relevant to the preparation of our consolidated financial statements. Specifically, we did not design and maintain: (i) program change management controls for financial systems to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel; (iii) computer operations controls to ensure that critical batch jobs are monitored and data backups are authorized and monitored; and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. These IT deficiencies did not result in a material misstatement to our consolidated financial statements; however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, we have determined these deficiencies in the aggregate constitute a material weakness. Our internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein. Remediation Plan for Material Weaknesses We are in the process of designing and implementing measures designed to improve our internal control over financial reporting and remediate the control deficiencies which led to the material weaknesses. As of December 31, 2024, our remediation measures are ongoing and include the following: • performing additional training to ensure a clear understanding of risk assessment, controls and monitoring activities related to financial processes and IT general controls related to financial reporting; • performing detailed risk assessments for significant financial processes to identify, design, and implement control activities related to internal control over financial reporting; • development and implementation of controls related to the formalization of our accounting policies and procedures and financial reporting; • development and implementation of controls related to significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over account reconciliations, segregation of duties and the preparation and review of journal entries; • development and implementation of IT security and governance controls to address program change of internally and externally developed systems and computer operations associated with information systems impacting the preparation of our consolidated financial statements; • development and implementation of controls related to the periodic monitoring and review of user access rights, segregation of duties conflicts, and, where it is determined there is a need for an individual to have conflicting access, a 53 periodic review of the underlying activities is performed by an independent person who does not have such conflicting access; • development and implementation of controls related to computer operations surrounding critical batch jobs and data backups; and • development and implementation of program change management controls, including new or material modifications, related to testing, authorization and implementation of program and data changes affecting financial IT applications and accounting records. We believe the measures described above will remediate the control deficiencies for the specific areas we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify, or in appropriate circumstances not complete, certain of the remediation measures described above. These material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We intend to evaluate current and projected resource needs on a regular basis and hire additional qualified resources as needed. Our ability to maintain qualified and adequate resources to support our business and our projected growth will be a critical component of our internal control environment. Actions Taken During 2024 The following remediation efforts were completed during the year ended December 31, 2024: • We have added a Manager of Stock Administration to our human resources function to oversee our equity awards and stock-based compensation; • We have designed and implemented new stock administration controls and enhanced existing stock administration controls to specifically address the accuracy and completeness of awards granted to certain employees or other service providers; • We have enhanced controls related to cash management to achieve complete, accurate and timely financial accounting, reporting and disclosures; • We have designed and implemented new controls for related party transactions and enhanced controls to achieve complete, accurate and timely identification of related party transactions, reporting and disclosures; • We have designed and implemented new controls for lease accounting and enhanced controls to achieve complete, accurate and timely financial accounting, reporting and disclosures; • We have enhanced controls related to the impairment and amortization of intangible assets and goodwill to achieve complete, accurate and timely financial accounting, reporting and disclosures; and • We have enhanced financial statement close and reporting controls related to significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures including controls over account reconciliations and review of journal entries. Changes in Internal Control over Financial Reporting We are taking actions to remediate the material weaknesses relating to our internal control over financial reporting. Other than the changes to our internal control over financial reporting described in "Actions Taken During 2024" above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Disclosure Controls and Procedures In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Item 9B . Other Information During our fiscal quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) entered into, modified (as to amount, price or timing of trades) or terminated (i) contracts, 54 instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information or (ii) non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K). Item 9C. Di s closure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 55 PA RT III Item 10 . Directors, Executive Officers and Corporate Governance The information required by this item will be set forth in the definitive proxy statement to be filed with the SEC in connection with the Annual Meeting of Stockholders within 120 days after December 31, 2024 (the “Proxy Statement”) and is incorporated into this Annual Report on Form 10-K by reference. Item 11 . Executive Compensation Information required by Item 11 of Part III will be included in our Proxy Statement relating to our 2025 Annual Meeting of Shareholders and is incorporated herein by reference. Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by Item 12 of Part III will be included in our Proxy Statement relating to our 2025 Annual Meeting of Shareholders and is incorporated herein by reference. Item 13 . Certain Relationships and Related Transactions, and Director Independence Information required by Item 13 of Part III will be included in our Proxy Statement relating to our 2025 Annual Meeting of Shareholders and is incorporated herein by reference. Item 14 . Principal Accounting Fees and Services Information required by Item 14 of Part III will be included in our Proxy Statement relating to our 2025 Annual Meeting of Shareholders and is incorporated herein by reference. 56 PART IV Item 15 . Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this Annual Report on Form 10-K: 1. Financial Statements The following financial statements and schedules of the Registrant are contained in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K: Page Report of Independent Registered Public Accounting Firm F- 2 Consolidated Financial Statements: Consolidated Balance Sheets F- 4 Consolidated Statements of Operations and Comprehensive Loss F- 5 Consolidated Statements of Changes in Stockholders' Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to the Consolidated Financial Statements F- 8 2. List of Financial Statement Schedules. All schedules are omitted because the required information is either not present, not present in material amounts or presented within the consolidated financial statements. (b) The exhibits listed in the following “Exhibits Index” are filed, furnished or incorporated by reference as part of this Annual Report. 57 Exhibit Index Description of Exhibit Incorporated Herein by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 3.1 Amended and Restated Certificate of Incorporation of LifeStance Health Group, Inc. 8-K 001-40478 3.1 6/15/2021 3.2 Second Amended and Restated Bylaws of LifeStance Health Group, Inc. 8-K 001-40478 3.1 3/9/2023 4.1 Form of Common Stock Certificate S-1/A 333-256202 4.1 6/1/2021 4.2 Description of Securities 10-K 001-40478 4.2 3/17/2022 10.1 Registration Rights Agreement, dated as of June 9, 2021, by and among the Company and each of the other persons from time to time party thereto 8-K 001-40478 10.1 6/15/2021 10.2 Stockholders Agreement, dated as of June 9, 2021, by and among the Company and each of the other persons from time to time party thereto 8-K 001-40478 10.2 6/15/2021 10.3+ Employment Agreement, dated September 7, 2022, between LifeStance Health Group, Inc. and Kenneth Burdick 10-Q 001-40478 10.8 11/9/2022 10.4+ Amended and Restated Employment Agreement, dated May 14, 2020, between LifeStance Health, Inc. and Danish Qureshi S-1 333-256202 10.9 5/17/2021 10.5+ Letter Agreement, dated September 7, 2022, between LifeStance Health Group, Inc. and Danish Qureshi 10-Q 001-40478 10.9 11/9/2022 10.6+ Employment Agreement, dated as of November 2, 2022, between LifeStance Health Group, Inc. and David Bourdon 10-K 001-40478 10.30 3/9/2023 10.7+ LifeStance Health Group, Inc. 2021 Equity Incentive Plan 8-K 001-40478 10.4 6/15/2021 10.8+ LifeStance Health Group, Inc. 2021 Employee Stock Purchase Plan 8-K 001-40478 10.5 6/15/2021 10.9+ LifeStance Health Group, Inc. 2021 Cash Incentive Plan 8-K 001-40478 10.6 6/15/2021 10.10 Form of Indemnification Agreement between LifeStance Health Group, Inc. and each of its directors and executive officers S-1 333-256202 10.17 5/17/2021 10.11 Form of Management Services Agreement with Supported Practices S-1 333-256202 10.19 5/17/2021 10.12+ Form of RSU Agreement under the 2021 Plan S-1/A 333-256202 10.12 6/1/2022 10.13+ Form of Notice of Amended Award Terms for Class B Unit Award Agreement S-1/A 333-256202 10.13 6/1/2022 10.14+ Form of Non-Qualified Stock Option Agreement 10-Q 001-40478 10.10 11/9/2022 10.15+ Form of RSU Agreement (Time) (Sell to Cover) under the 2021 Plan 10-K 001-40478 10.28 3/9/2023 10.16+ Form of RSU Agreement (Time and Performance) (Sell to Cover) under the 2021 Plan 10-K 001-40478 10.29 3/9/2023 10.17+ Severance and Change in Control Policy 10-Q 001-40478 10.6 8/10/2022 10.18+ Separation and Release of Claims Agreement, dated as of June 30, 2024, between LifeStance Health Group, Inc. and Danish Qureshi 10-Q 001-40478 10.2 8/8/2024 10.19 Credit Agreement, dated as of December 19, 2024, among LifeStance Health Holdings, Inc., Lynnwood Intermediate Holdings, Inc., and Capital One, National Association X 19.1 LifeStance Health Group, Inc. Insider Trading Policy X 21.1 List of subsidiaries of LifeStance Health Group, Inc. X 23.1 Consent of PricewaterhouseCoopers LLP X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 58 Description of Exhibit Incorporated Herein by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed Herewith 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97.1 LifeStance Health Group, Inc. Policy for Recoupment of Incentive Compensation 10-K 001-40478 97.1 2/28/2024 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Document 104 The Cover page from the Annual Report on Form 10-K of LifeStance Health Group, Inc. for the year ended December 31, 2024 formatted in Inline XBRL + Indicates a management contract or compensatory plan, contract or arrangement. Item 16. Form 10-K Summary None. 59 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . LifeStance Health Group, Inc. Date: February 27, 2025 By: /s/ Kenneth Burdick Kenneth Burdick Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Kenneth Burdick Chief Executive Officer and Chairman February 27, 2025 Kenneth Burdick (Principal Executive Officer) /s/ David Bourdon Chief Financial Officer and Treasurer February 27, 2025 David Bourdon (Principal Financial and Accounting Officer) /s/ Robert Bessler Director February 27, 2025 Robert Bessler /s/ Darren Black Director February 27, 2025 Darren Black /s/ Jeffrey Crisan Director February 27, 2025 Jeffrey Crisan /s/ Teresa DeLuca Director February 27, 2025 Teresa DeLuca /s/ William Miller Director February 27, 2025 William Miller /s/ Jeffrey Rhodes Director February 27, 2025 Jeffrey Rhodes /s/ Eric Shuey Director February 27, 2025 Eric Shuey /s/ Seema Verma Director February 27, 2025 Seema Verma /s/ Katherine Wood Director February 27, 2025 Katherine Wood 60 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F- 2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations and Comprehensive Loss F- 5 Consolidated Statements of Changes in Stockholders' Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F- 8 F- 1 Report of Independent Regis tered Public Accounting Firm To the Board of Directors and Stockholders of LifeStance Health Group, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of LifeStance Health Group, Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders' equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the Company not (i) designing and maintaining an effective control environment commensurate with the Company's financial reporting requirements due to an insufficient complement of resources in the accounting/finance and IT functions, with an appropriate level of knowledge, experience and training, (ii) maintaining formal accounting policies and procedures, and not designing and maintaining effective controls related to significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over account reconciliations, segregation of duties and the preparation and review of journal entries, and (iii) designing and maintaining effective controls over IT general controls for information systems that are relevant to the preparation of the consolidated financial statements related to (a) program change management controls, (b) user access controls, (c) computer operations controls, and (d) testing and approval controls for program development. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management's Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the F- 2 company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Patient Accounts Receivable, Net As described in Note 2 to the consolidated financial statements, total revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient care. The Company reports revenue net of price concessions provided to patients. The differences between the price at which the Company expects to receive from patients and the standard billing rates are accounted for as contractual adjustments, discounts or implicit price concessions, which are deducted from gross revenue to arrive at net revenue. Patient accounts receivable are carried at the original charge for the services provided adjusted for explicit and implicit price concessions. Management regularly reviews data about the major payor sources of revenue and determines its estimates based on contractual agreements, its discount policies, and its historical experience. Patient accounts receivable, net were $131.8 million as of December 31, 2024. The principal considerations for our determination that performing procedures relating to the valuation of patient accounts receivable, net is a critical audit matter are (i) the significant judgment by management when developing the estimate of patient accounts receivable, net and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the audit evidence obtained related to the estimate. As described above in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, there is a material weakness related to the Company’s control environment, which impacted this matter. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management’s process for developing the estimate of patient accounts receivable, net, (ii) evaluating the relevance and use of historical experience data as an input into the estimate, (iii) testing the completeness and accuracy of underlying historical experience data used in the estimate, and (iv) evaluating the historical accuracy of management’s estimate of the amount expected to be collected by (a) testing, on a sample basis, the completeness and accuracy of revenue transactions and cash collections used in management’s analysis and (b) comparing actual cash collections to the previously recorded patient accounts receivable. /s/ PricewaterhouseCoopers LLP Seattle, Washington February 27, 2025 We have served as the Company's auditor since 2020. F- 3 LIFESTANCE HEALTH GROUP, INC. CONSOLIDATED BAL ANCE SHEETS (In thousands, except for par value) December 31, 2024 2023 CURRENT ASSETS Cash and cash equivalents $ 154,571 $ 78,824 Patient accounts receivable, net 131,802 125,405 Prepaid expenses and other current assets 26,137 21,502 Total current assets 312,510 225,731 NONCURRENT ASSETS Property and equipment, net 166,041 188,222 Right-of-use assets 147,878 170,703 Intangible assets, net 190,799 221,072 Goodwill 1,293,346 1,293,346 Other noncurrent assets 7,724 10,895 Total noncurrent assets 1,805,788 1,884,238 Total assets $ 2,118,298 $ 2,109,969 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 7,242 $ 7,051 Accrued payroll expenses 117,461 102,478 Other accrued expenses 46,942 35,012 Contingent consideration — 8,169 Operating lease liabilities, current 49,449 46,475 Other current liabilities 7,792 3,688 Total current liabilities 228,886 202,873 NONCURRENT LIABILITIES Long-term debt, net 279,790 280,285 Operating lease liabilities, noncurrent 148,699 181,357 Deferred tax liability, net 14,329 15,572 Other noncurrent liabilities 309 952 Total noncurrent liabilities 443,127 478,166 Total liabilities $ 672,013 $ 681,039 COMMITMENTS AND CONTINGENCIES (see Note 13) STOCKHOLDERS’ EQUITY Preferred stock – par value $ 0.01 per share; 25,000 shares authorized as of December 31, 2024 and December 31, 2023; 0 shares issued and outstanding as of December 31, 2024 and December 31, 2023 — — Common stock – par value $ 0.01 per share; 800,000 shares authorized as of December 31, 2024 and December 31, 2023; 382,735 and 378,725 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively 3,827 3,789 Additional paid-in capital 2,259,818 2,183,684 Accumulated other comprehensive income 929 2,303 Accumulated deficit ( 818,289 ) ( 760,846 ) Total stockholders' equity 1,446,285 1,428,930 Total liabilities and stockholders’ equity $ 2,118,298 $ 2,109,969 The accompanying Notes are an integral part of these consolidated financial statements. F- 4 LIFESTANCE HEALTH GROUP, INC. consolidated statements of operations and comprehensive loss (In thousands, except for Net Loss per Share) Year Ended December 31, 2024 2023 2022 TOTAL REVENUE $ 1,250,970 $ 1,055,665 $ 859,542 OPERATING EXPENSES Center costs, excluding depreciation and amortization shown separately below 848,571 753,569 622,525 General and administrative expenses 363,062 410,793 377,993 Depreciation and amortization 70,950 80,437 69,198 Total operating expenses $ 1,282,583 $ 1,244,799 $ 1,069,716 LOSS FROM OPERATIONS $ ( 31,613 ) $ ( 189,134 ) $ ( 210,174 ) OTHER EXPENSE Gain (loss) on remeasurement of contingent consideration 1,725 3,972 ( 1,688 ) Transaction costs ( 827 ) ( 89 ) ( 722 ) Interest expense, net ( 26,535 ) ( 21,220 ) ( 19,928 ) Other expense ( 363 ) ( 112 ) ( 218 ) Total other expense $ ( 26,000 ) $ ( 17,449 ) $ ( 22,556 ) LOSS BEFORE INCOME TAXES ( 57,613 ) ( 206,583 ) ( 232,730 ) INCOME TAX BENEFIT 170 20,321 17,166 NET LOSS $ ( 57,443 ) $ ( 186,262 ) $ ( 215,564 ) NET LOSS PER SHARE, BASIC AND DILUTED ( 0.15 ) ( 0.51 ) ( 0.61 ) Weighted-average shares used to compute basic and diluted net loss per share 379,147 367,457 355,278 NET LOSS $ ( 57,443 ) $ ( 186,262 ) $ ( 215,564 ) OTHER COMPREHENSIVE (LOSS) INCOME Unrealized (losses) gains on cash flow hedge, net of tax ( 1,374 ) ( 971 ) 3,274 COMPREHENSIVE LOSS $ ( 58,817 ) $ ( 187,233 ) $ ( 212,290 ) The accompanying Notes are an integral part of these consolidated financial statements. F- 5 LIFESTANCE HEALTH GROUP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands) Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders' Shares Amount Capital Income Deficit Equity Balances at December 31, 2021 374,255 $ 3,743 $ 1,898,357 $ — $ ( 357,072 ) $ 1,545,028 Net loss — — — — ( 215,564 ) ( 215,564 ) Issuance of common stock upon vesting of restricted stock units 2,204 22 ( 485 ) — — ( 463 ) Forfeitures ( 363 ) ( 3 ) ( 1,357 ) — — ( 1,360 ) Surrender of common stock ( 132 ) ( 1 ) ( 981 ) — — ( 982 ) Other comprehensive income — — — 3,274 — 3,274 Stock-based compensation expense — — 188,790 — — 188,790 Balances at December 31, 2022 375,964 $ 3,761 $ 2,084,324 $ 3,274 $ ( 572,636 ) $ 1,518,723 Net loss — — — — ( 186,262 ) ( 186,262 ) Adoption of ASU 2016-13 — — — — ( 1,948 ) ( 1,948 ) Issuance of common stock upon vesting of restricted stock units 4,831 48 ( 48 ) — — — Forfeitures ( 2,070 ) ( 20 ) ( 3,379 ) — — ( 3,399 ) Other comprehensive loss — — — ( 971 ) — ( 971 ) Stock-based compensation expense — — 102,787 — — 102,787 Balances at December 31, 2023 378,725 $ 3,789 $ 2,183,684 $ 2,303 $ ( 760,846 ) $ 1,428,930 Net loss — — — — ( 57,443 ) ( 57,443 ) Issuance of common stock upon vesting of restricted stock units 7,221 71 ( 71 ) — — — Forfeitures ( 3,211 ) ( 33 ) 33 — — — Other comprehensive loss — — — ( 1,374 ) — ( 1,374 ) Stock-based compensation expense — — 76,172 — — 76,172 Balances at December 31, 2024 382,735 $ 3,827 $ 2,259,818 $ 929 $ ( 818,289 ) $ 1,446,285 The accompanying Notes are an integral part of these consolidated financial statements. F- 6 LIFESTANCE HEALTH GROUP, INC. CONSOLIDATED STATEMENTS OF CAS H FLOWS (In thousands) Year Ended December 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 57,443 ) $ ( 186,262 ) $ ( 215,564 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 70,950 80,437 69,198 Non-cash operating lease costs 39,502 39,987 38,161 Stock-based compensation 76,172 99,388 187,430 Deferred income taxes ( 958 ) ( 21,920 ) ( 16,733 ) Loss on debt extinguishment 5,032 — 3,380 Amortization of discount and debt issue costs 1,666 2,101 1,949 (Gain) loss on remeasurement of contingent consideration ( 1,725 ) ( 3,972 ) 1,688 Other, net 1,431 7,080 218 Change in operating assets and liabilities, net of businesses acquired: Patient accounts receivable, net ( 6,397 ) ( 24,175 ) ( 21,663 ) Prepaid expenses and other current assets ( 3,332 ) ( 3,070 ) ( 3,431 ) Accounts payable 501 ( 5,605 ) 7,667 Accrued payroll expenses 14,984 26,484 12,100 Operating lease liabilities ( 46,748 ) ( 37,564 ) ( 13,169 ) Other accrued expenses 13,625 10,207 1,558 Net cash provided by (used in) operating activities $ 107,260 $ ( 16,884 ) $ 52,789 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 21,566 ) ( 40,520 ) ( 79,255 ) Acquisitions of businesses, net of cash acquired — ( 19,820 ) ( 60,206 ) Net cash used in investing activities $ ( 21,566 ) $ ( 60,340 ) $ ( 139,461 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt, net of discount 287,809 57,753 257,324 Payments of debt issue costs ( 1,818 ) ( 188 ) ( 7,266 ) Payments of long-term debt ( 289,494 ) ( 2,470 ) ( 187,766 ) Prepayment for debt paydown — — ( 1,609 ) Payments of contingent consideration ( 6,444 ) ( 7,668 ) ( 12,515 ) Taxes related to net share settlement of equity awards — — ( 904 ) Net cash (used in) provided by financing activities $ ( 9,947 ) $ 47,427 $ 47,264 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 75,747 ( 29,797 ) ( 39,408 ) Cash and Cash Equivalents - Beginning of period 78,824 108,621 148,029 CASH AND CASH EQUIVALENTS – END OF PERIOD $ 154,571 $ 78,824 $ 108,621 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net $ 24,992 $ 21,044 $ 14,365 Cash paid for taxes, net of refunds $ 57 $ 80 $ 2,237 SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES Equipment financed through finance leases $ — $ — $ 363 Contingent consideration incurred in acquisitions of businesses $ — $ 1,985 $ 11,221 Acquisition of property and equipment included in liabilities $ 1,469 $ 3,827 $ 7,891 Surrender of common stock $ — $ — $ 982 The accompanying Notes are an integral part of these consolidated financial statements. F- 7 LIFESTANCE HEALTH GROUP, INC. NOTES TO CONSOLIDA TED FINANCIAL STATEMENTS (In thousands, except per share amounts) NOTE 1 NATURE OF THE BUSINESS Description of Business LifeStance Health Group was formed as a Delaware corporation on January 28, 2021 for the purpose of completing an initial public offering (“IPO”) and related transactions in order to carry on the business of LifeStance TopCo, L.P. (“LifeStance TopCo”) and subsidiaries. Prior to the IPO, LifeStance Health Group had no operations. LifeStance Health Group is the sole equity holder of LifeStance TopCo and operates and controls all of the business and affairs. As a result, LifeStance Health Group consolidates the financial results of LifeStance TopCo, its wholly-owned subsidiaries and variable interest entities. LifeStance Health Group and LifeStance TopCo are collectively referred to herein as the “Company” or "LifeStance". LifeStance Health Group, Inc. ("LifeStance Health Group") operates as a provider of outpatient mental health services, spanning psychiatric evaluations and treatment, psychological and neuropsychological testing, and individual, family and group therapy. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The accompanying consolidated financial statements include the results of the Company, its wholly-owned subsidiaries, and variable interest entities in which the Company has an interest and is the primary beneficiary (see “Variable Interest Entities” below). Intercompany transactions and balances have been eliminated in consolidation. Use of Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment evolves. Changes in estimates are made when circumstances warrant. Significant estimates and assumptions by management may affect total revenue impacted by variable consideration and discounts, price concessions, allowance for credit losses, the carrying value of long-lived assets (including goodwill and intangible assets), acquisition accounting, the calculation of a contingent liability in connection with an acquisition, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, payor settlements, contingencies, litigation and related legal accruals and the value attributed to employee stock-based awards. Segment Information The Company has a single operating and reportable segment – mental health services. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews consolidated financial information for purposes of making operating decisions, assessing financial performance, and allocating resources. As the Company operates as one operating segment, all required segment financial information is found in the accompanying consolidated financial statements. For the periods presented, all of the Company’s long-lived assets were located in the United States, and all revenues from providing counseling sessions to patients were earned in the United States. The accounting policies for segment reporting are the same as for the Company as a whole. The chief operating decision maker assesses performance for the mental health services segment and decides how to allocate resources based on net loss, which is reported on the accompanying consolidated statements of operations and comprehensive loss as net loss. Net loss is used to monitor budget versus actual results for assessment of segment performance. The chief operating decision maker considers budget-to-actual variances on a monthly basis when making decisions about allocating resources and assessing the performance of the segment. The chief operating decision maker utilizes consolidated expense information regularly provided in the budget-to-actual analysis in order to assist with assessing performance and deciding how to allocate resources, which align with the consolidated expense categories as disclosed on the face of the accompanying consolidated statements of operations and comprehensive loss. F- 8 The measure of segment assets is reported on the accompanying consolidated balance sheets as total assets. The chief operating decision maker does not utilize total assets in the assessment of performance and allocation of resource decisions as the assessment and decisions are not made on the basis of total assets. Variable Interest Entities The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex, involve judgment, and the use of estimates and assumptions based on available information. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. The Company performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. The Company acquires and operates certain care centers which are deemed to be Friendly-Physician Entities (“FPEs”). As part of an FPE acquisition, the Company acquires 100 % of the non-medical assets, however due to legal requirements the physician-owners must retain 100% of the equity interest. The Company’s agreements with FPEs generally consist of both a Management Service Agreement, which provides for various administrative and management services to be provided by the Company to the FPE, and Stock Transfer Restriction (“STR”) agreements with the physician-owners of the FPEs, which provide for the transition of ownership interests of the FPEs under certain conditions. The outstanding voting equity instruments of the FPEs are owned by the nominee shareholders appointed by the Company under the terms of the STR agreements. The Company has the right to receive income as an ongoing management fee, which effectively absorbs all of the residual interests and has also provided financial support through loans to the FPEs. The Company has exclusive responsibility for the provision of all nonmedical services including facilities, technology and intellectual property required for the day-to-day operation and management of each of the FPEs, and makes recommendations to the FPEs in establishing the guidelines for the employment and compensation of the physicians and other employees of the FPEs. In addition, the STR agreements provide that the Company has the right to designate an appropriately licensed person(s) to purchase the equity interest of the FPE for a nominal amount in the event of a succession event at the Company’s discretion. Based on the provisions of these agreements, the Company determined that the FPEs are VIEs due to the equity holder having insufficient capital at risk, and the Company has a variable interest in the FPEs. The contractual arrangements described above allow the Company to direct the activities that most significantly affect the economic performance of the FPEs. Accordingly, the Company is the primary beneficiary of the FPEs and consolidates the FPEs under the VIE model. Furthermore, as a direct result of nominal initial equity contributions by the physicians, the financial support the Company provides to the FPEs (e.g., loans) and the provisions of the contractual arrangements and nominee shareholder succession arrangements described above, the interests held by noncontrolling interest holders lack economic substance and do not provide them with the ability to participate in the residual profits or losses generated by the FPEs. Therefore, all income and expenses recognized by the FPEs are allocated to the Company. The Company does not hold interests in any VIEs for which the Company is not deemed to be the primary beneficiary. As noted previously, the Company acquires 100% of the non-medical assets of the VIEs. The aggregate carrying values of the VIEs total assets and total liabilities not purchased by the Company but included on the consolidated balance sheets were not material at December 31, 2024 and 2023 . Total Revenue Total revenue is reported at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient care. These amounts are due from patients, third-party payors (including health insurers and government programs) and others and include variable consideration for retroactive adjustments due to settlement of audits, reviews and investigations. Generally, the Company bills patients and third-party payors several days after the services are performed. The Company has elected the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects the period between when service is transferred to a customer and when the customer pays for the service will be one year or less. Revenue is recognized as the related performance obligation is satisfied. In patient revenue, the patient is the Company’s customer, and a signed patient treatment consent generally represents a written contract between the Company and the patient. Performance obligations are determined based on the nature of the services provided by the Company. Generally, the Company’s performance obligations are satisfied over time and relate to counseling sessions that are discrete in nature and commence and terminate at the discretion of the patient and thus each individual counseling session is a performance obligation. Revenue for performance obligations satisfied over time is recognized when the services are rendered based on the amount the Company expects to be entitled to for the services provided to the patient. The Company believes this method provides a faithful depiction of the transfer of services. Because all of its performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption provided in Accounting Standards Codification (“ASC”) 606-10-50-14(A) and, therefore, is not required to F- 9 disclose the aggregate amount of the transaction prices allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The Company determined the underlying nature of the services provided are consistent irrespective of the payor type. Therefore, management assesses price concessions using a portfolio approach in its contracts with patients. The Company reports revenue net of price concessions related to contractual adjustments provided to third-party payors, discounts provided to uninsured patients in accordance with the Company’s policy and/or implicit price concessions provided to patients. The differences between the price at which the Company expects to receive from patients and the standard billing rates are accounted for as contractual adjustments, discounts or implicit price concessions, which are deducted from gross revenue to arrive at net revenues. The Company determines its estimates of contractual adjustments, discounts and implicit price concessions based on contractual agreements, its discount policies, and its historical experience. Settlements with third-party payors for retroactive adjustments due to audits, review or investigations and disputes by either the Company or the third-party payors within the allowable specific timeframe are considered variable consideration and are included in the determination of estimated transaction price for providing patient services. These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved. Estimated settlements are adjusted in future periods as new information becomes available, or as years are settled or are no longer subject to such audits, reviews and investigations. Generally, patients who are covered by third-party payors are responsible for related deductibles and coinsurance, which vary in amount. The Company also provides services to uninsured patients, and offers those uninsured patients a discount, either by policy or law, from standard charges. The Company estimates the transaction price for patients with deductibles and coinsurance and for those who are uninsured based on historical experience and current market conditions. The initial estimate of the transaction price is determined by reducing the standard charge by any contractual adjustments, discounts, and implicit price concessions. Subsequent changes to the estimate of the transaction price are generally recorded as adjustments to patient service revenue in the period of the change. Adjustments arising from a change in the estimate of the transaction price were not material for all periods presented. Subsequent changes that are determined to be the result of an adverse change in the patient’s or third-party payor’s ability to pay are recorded as bad debt expense. Services are occasionally provided to patients with a reduced ability to pay for their care. Therefore, the Company has determined it has provided implicit price concessions to patients who may be in need of financial assistance. The implicit price concessions included in estimating the transaction price represent the difference between amounts billed to patients and the amounts the Company expects to collect based on its collection history with those patients. Patients who meet the Company’s criteria for discounted pricing are provided care at amounts less than established rates. Such amounts determined to be financial assistance are not reported as revenue. Center Costs, Excluding Depreciation and Amortization Center costs, excluding depreciation and amortization includes the costs the Company incurs to operate its centers, consisting primarily of salaries, wages and employee benefits for clinicians and patient support, occupancy costs such as rent and utilities, medical supplies, insurance and other operating expenses. Center costs, excluding depreciation and amortization excludes stock-based compensation. Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less at the time of purchase. Cash and cash equivalents consist of demand deposits held with financial institutions and investments in money market funds. Cash and cash equivalents are stated at cost, which approximates fair value. The Company maintains cash balances at financial institutions which are insured by the Federal Deposit Insurance Corporation. At times, the amounts on deposit may exceed the insured limit. Patient Accounts Receivable Patient accounts receivable are carried at the original charge for the services provided adjusted for explicit and implicit price concessions, including allowances for contractual adjustments. Management regularly reviews data about the major payor sources of revenue in evaluating the sufficiency of the explicit and implicit price concessions. For receivables associated with services provided to patients who have third-party insurance coverage, the Company analyzes contractually due amounts and provides an allowance for contractual adjustments. In evaluating the collectability of patient receivables, the Company analyzes its past history and identifies trends for each of its major payor sources of revenue to estimate the appropriate allowance for credit losses. Management determines the allowance for credit losses by identifying troubled accounts, by using historical experience applied to an aging of accounts, and by considering a patient’s financial history, credit history, and current economic conditions. Patient accounts receivable are written off as bad debt expense when deemed uncollectible. Recoveries of receivables previously written off are recorded as bad debt recoveries. F- 10 The Company grants credit without collateral to its patients, most of whom are insured under third-party payor agreements. Revenue and cash flows from the Medicare program are dependent upon the rates set by, and the promptness of payment from, federally administered programs, and in management’s opinion do not create a significant credit risk to the Company. Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation. Assets acquired under capital leases are stated at the present value of future minimum lease payments. Major additions and improvements are capitalized, while replacements, maintenance, and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation of property and equipment is computed primarily using the straight-line method over the following estimated useful lives: Furniture, fixtures and equipment 5 - 7 years Computers and peripherals 3 years Internal-use software 1 - 3 years Medical equipment 7 years Assets acquired under capital leases, and leasehold improvements, are amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of the assets, generally 5 to 10 years . When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss in the period realized. Leases The Company determines if a contract meets the definition of a lease at inception and evaluates the lease classification at that time. The Company has elected not to recognize on the consolidated balance sheets leases with terms of one year or less. Options to extend or terminate the lease are included in the determination of the lease term when it is reasonably certain that the Company will exercise such options. When the implicit rate is unknown, an incremental borrowing rate based on the information available at the commencement date is used in determining the present value of the lease payments. Lease liabilities represent the obligation to make lease payments and right-of-use assets represent the right to use the underlying asset during the lease term. Lease liabilities and their corresponding right-of-use assets are recognized in the consolidated balance sheets as the commencement date based on the present value of the future minimum lease payments over the estimated lease term. Right-of-use assets are adjusted for payments made at or before the commencement date and tenant incentives under the lease. When a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the right-of-use assets and the lease liabilities. The effects of these escalation clauses or concessions have been reflected in lease expenses on a straight-line basis over the expected lease term and any variable lease payments subsequent to establishing the lease liability are expensed as incurred. The Company separately allocates the lease (e.g., fixed lease payments for right-to-use land, building, etc.) and non-lease components (e.g., common area maintenance) for its leases. Operating lease and variable lease costs are included in center costs, excluding depreciation and amortization and general and administrative expenses in the consolidated statements of operations and comprehensive loss. Variable lease costs are the portion of lease payments that are not fixed over the lease term. Variable lease costs include real estate payments that are adjusted periodically for inflation or other variables as well as payments for taxes and insurance. The Company expenses variable lease costs in the period incurred. Operating leases are included in right-of-use assets, operating lease liabilities, current and operating lease liabilities, noncurrent on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, other current liabilities, and other noncurrent liabilities on the Company’s consolidated balance sheets. Finance leases are not material. Business Combinations The Company accounts for business combinations using the acquisition method of accounting. That method requires that the purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The consideration the Company transfers in exchange for the acquiree may also include equity interests which the Company records at fair value at closing of the transaction. Transaction costs incurred as a result of the acquisitions are expensed in the Company’s consolidated financial statements in the period incurred. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, the Company makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins, attrition rates, and discount rates. Fair value estimates are based on the assumptions the Company believes a market participant would use in pricing the asset or liability. Management’s estimates of fair value are based upon assumptions determined to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the estimates. During the measurement period, which is not to exceed one F- 11 year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. The measurement period provides a reasonable period of time to determine the value of identifiable assets acquired, liabilities assumed, consideration transferred, equity interests, and goodwill. New information that gives rise to a measurement period adjustment should relate to events or circumstances existing at the acquisition date. Information pertaining to events that occur after the acquisition date are not measurement period adjustments. All changes that do not qualify as measurement period adjustments are included in current period earnings. The Company includes the results of all acquisitions in the consolidated financial statements from the date of acquisition. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be generated by the asset or asset group. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. There was no impairment of long-lived assets for the year ended December 31, 2024, an immaterial impairment of long-lived assets for the year ended December 31, 2023 , and no impairment of long-lived assets for the year ended December 31, 2022 . Intangible Assets Intangible assets consist of identifiable intangible assets acquired through business acquisitions. Intangible assets with definite lives are amortized on the straight-line basis over their estimated useful lives or contractual lives, whichever is shorter, as follows: Non-competition agreements 3 to 6 years Trade names 4 to 22.5 years Goodwill The Company recognizes the excess of the purchase price over the fair value of identifiable net assets acquired as goodwill. The Company performs a qualitative assessment on goodwill at least annually on October 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. If it is determined in the qualitative assessment that the fair value of a reporting unit is more likely than not below its carrying amount, then the Company will perform a quantitative impairment test. The quantitative goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. Any excess in the carrying value of a reporting unit's goodwill over its fair value is recognized as an impairment loss, limited to the total amount of goodwill allocated to that reporting unit. For purposes of goodwill impairment testing, the Company has one reporting unit. There were no goodwill impairments recorded during all periods presented. Fair Value Measurements Fair value is the price at which an asset could be exchanged or a liability transferred (an exit price) in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used on measuring fair value. These tiers include: • Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets at the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. • Level 2—Inputs are other than quoted prices included in Level 1, which are either directly or indirectly observable for the asset or liability through correlation with market data at the reporting date and for the duration of the instrument’s anticipated life. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the reporting date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable. The carrying values of the Company’s financial instruments approximate fair value due to their short-term maturities. The Company has obligations to transfer contingent consideration to former owners and sellers of certain entities in conjunction with its acquisitions, if specified future operational objectives and/or financial results are met. The Company records the acquisition date F- 12 fair value of these contingent liabilities and measures the fair value on a recurring basis. The Company estimates the fair value of the contingent consideration liability based on the likelihood and timing of the contingent earn-out payments. The fair value is derived using valuation methodologies, such as a discounted cash flow model, and is not based on market exchange, dealer, or broker traded transactions. This valuation incorporates certain assumptions and projections in determining the fair value assigned to such liability. Stock-Based Compensation The Company accounts for stock-based compensation awards approved by the Board of Directors, including restricted stock awards ("RSAs"), restricted stock units ("RSUs"), and stock options, based on their estimated grant date fair value. The Company estimates the fair value of the RSAs and RSUs based on the fair value of the underlying common stock on their grant date. The Company's stock awards are granted on service-, performance-, and/or market-based vesting conditions. RSUs are granted to certain employees and other service providers subject to certain service-based or service- and performance-based vesting conditions. The ultimate number of shares that are issued in respect of the performance-based RSUs are based on actual performance over a three or four-year performance period and ranging from zero to 100% of the performance-based RSUs subject to the award. Each fiscal year within the award period represents a separately vesting tranche of the award. For a portion of the performance-based RSUs, as the performance conditions have not been established beyond the first year of the award, a grant date has not yet been established for the remaining annual periods of these performance-based RSUs. The related compensation expense for the performance awards is recognized on a straight line basis over the requisite service period for each separately vesting tranche of the award if and when the Company concludes that it is probable that the performance conditions will be achieved. At the end of each reporting period, the Company reevaluates the probability that the performance conditions will be achieved. The service-based awards are recognized on a straight line basis over the requisite service period, which is generally one to four years. The market-based vesting conditions for awards granted in connection with the Company's IPO provided for the holder to vest one-third of their awards within six months of the IPO, one-third of their awards on the first anniversary of the IPO, one-sixth of their awards eighteen months from the completion of the IPO and the remaining one-sixth of their awards two years from the completion of the IPO. The Company granted stock options to certain employees, which generally vest as one-third (1/3) of the underlying shares based on continued service over four years , with 25 % of the time-based option shares vesting each year, and as to two-thirds (2/3) of the underlying shares subject to market-based vesting conditions over four years , with 25 % of the market-based option shares vesting each year subject to attainment of specified performance thresholds. Options generally expire ten years from the date of grant. The exercise price for each stock option award is equal to the closing price of a share of the Company's common stock on the grant date of the award. For stock option awards issued with only time-based vesting conditions, the fair value is estimated on the date of grant using a Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company's expected dividend yield. For stock option awards issued with time- and market-based vesting conditions, the grant date fair value is determined through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the market condition may not be satisfied. A Monte Carlo simulation requires the use of various assumptions, including the underlying stock price, volatility and the risk-free interest rate as of the valuation date, corresponding to the length of the time remaining in the performance period, and expected dividend yield. The expected term represents the derived service period for the respective tranches, which is the longer of the specified service period or the period in which the market conditions are expected to be met. The Company has elected to account for forfeitures as they occur. Income Taxes The Company is subject to income taxes in both the United States and various state jurisdictions. The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be in effect when book/tax differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in operations in the period that includes the enactment date. The Company records a valuation allowance on deferred tax assets when it is determined that some portion or all of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management evaluates all significant available positive and negative evidence, including historical operating results, estimates of future taxable income and the existence of prudent and feasible tax planning strategies. Changes in the expectations regarding the realization of deferred tax assets could materially impact income tax expense in future periods. F- 13 The Company recognizes and measures uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken by determining if the weight of available evidence indicates that it is more-likely-than-not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a regular basis. Its evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of audit and effective settlement of audit issues. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as a component of interest expense in the consolidated statements of operations and comprehensive loss . Advertising and Marketing Costs Advertising and marketing costs include all communications and campaigns to the Company’s clients and target audience. Advertising costs are charged to expense as they are incurred in general and administrative expenses within the Company’s consolidated statements of operations and comprehensive loss. Advertising expense for the years ended December 31, 2024, 2023 and 2022, were $ 12,567 , $ 9,399 and $ 8,632 , respectively. Debt Issue Costs For term loans, debt discount and debt issue costs are presented net within total long-term debt and amortized using the effective interest rate method over the term of the loan. For revolving loans and delayed draw term loan commitments, the Company presents the debt issue costs as an asset and amortizes the costs on a straight-line basis over the term of the revolving loan and delayed draw term loan commitment, respectively. Amortization of discount and debt issue costs, which includes loss on debt extinguishment, is recorded as interest expense in the consolidated statements of operations and comprehensive loss and amounted to $ 6,698 , $ 2,101 and $ 3,720 for the years ended December 31, 2024, 2023 and 2022 , respectively. Comprehensive Loss Comprehensive loss consists of net loss and unrealized gains or losses on interest rate swaps. Unrealized gains or losses on interest rate swaps are net of any reclassification adjustments for realized gains and losses included in the consolidated statements of operations and comprehensive loss . Net Loss Per Share Net loss per share is computed in conformity with the two-class method required for participating securities. Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares of the Company outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common shares, including potential dilutive common shares assuming the dilutive effect of common share equivalents, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common shares outstanding would have been anti-dilutive. Retirement Plan The Company maintains a profit sharing and retirement savings 401(k) plan (the “401(k) Plan”) for full-time employees. Participants may elect to contribute to the 401(k) Plan, through payroll deductions, subject to Internal Revenue Service limitations. The Company 401(k) Plan provides for a 401(k) matching program under which the Company will match 100% of the employees’ contribution up to 3% of the employees’ compensation, plus 50% of salary deferrals between 3% and 5% of employees’ compensation. The matching contribution is subject to certain eligibility and vesting conditions. The Company recorded expense of $ 21,591 , $ 18,846 and $ 15,746 for the years ended December 31, 2024, 2023 and 2022 , respectively, for discretionary matching and profit-sharing contributions to the 401(k) Plan. Indemnification The Company’s arrangements generally include certain provisions for indemnifying patients against liabilities if there is a breach of a patient’s data or if the Company’s service infringes on a third party’s intellectual property rights. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as a director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer liability insurance coverage that would generally enable it to recover a portion of any future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. F- 14 Professional Liability Insurance The Company maintains a professional liability insurance policy with a third-party insurer on a claims-made basis. The reserve for professional liability includes a claims-made basis of reported losses and amounts for incurred but not reported losses utilizing actuarial studies of historical and industry data (see Note 13). Concentrations of Risk and Significant Customers The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and patient accounts receivable. Although the Company deposits its cash with multiple financial institutions in the U.S., its deposits, at times, may exceed federally insured limits. The Company does not have any individual customer that exceeded 10% of the Company’s patient accounts receivable balance at December 31, 2024 and 2023. Two payors individually exceeded 10% of the Company’s patients accounts receivable balance at December 31, 2024 and 2023. These payors comprise 19 % and 15 % of the patient accounts receivable balance, respectively, as of December 31, 2024, and 17 % and 15 % , respectively, as of December 31, 2023 . Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis. The Company adopted ASU 2023-07 on January 1, 2024 on a retrospective basis for all periods presented. The adoption of the amendments in ASU 2023-07 impacted the Company's disclosures in the notes to the consolidated financial statements and did not have a material impact on its consolidated balance sheets, results of operations or cash flows. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 will apply on a prospective basis and retrospective application is permitted. The Company is in process of evaluating the impact of adoption of ASU 2023-09 on the Company's consolidated financial statements and disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires disclosure of additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those fiscal years. Early adoption is permitted and should be applied either prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all periods presented in the financial statements. The Company is in the process of evaluating the impact of the adoption of ASU 2024-03 on the Company's consolidated financial statements and disclosures. NOTE 3 TOTAL REVENUE The Company’s total revenue is dependent on a series of contracts with third-party payors, which is typical for providers in the healthcare industry. The Company has determined that the nature, amount, timing and uncertainty of revenue and cash flows are affected by the payor mix with third-party payors which have different reimbursement rates. The payor mix of fee-for-service revenue from patients and third-party payors consists of the following: Year Ended December 31, 2024 2023 2022 Amount % of Total Revenue Amount % of Total Revenue Amount % of Total Revenue Commercial $ 1,137,919 91 % $ 960,128 91 % $ 776,343 91 % Government 57,882 5 % 44,653 4 % 37,058 4 % Self-pay 43,883 3 % 40,797 4 % 36,382 4 % Total patient service revenue 1,239,684 99 % 1,045,578 99 % 849,783 99 % Nonpatient service revenue 11,286 1 % 10,087 1 % 9,759 1 % Total $ 1,250,970 100 % $ 1,055,665 100 % $ 859,542 100 % F- 15 Among the commercial payors, the table below represents insurance companies that individually represented 10 % or more of revenue: Year Ended December 31, 2024 2023 2022 Payor A 17 % 19 % 19 % Payor B 15 % 13 % 14 % NOTE 4 PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: December 31, 2024 2023 Leasehold improvements $ 173,840 $ 170,212 Computers and peripherals 23,740 27,302 Internal-use software 9,273 7,197 Furniture, fixtures and equipment 42,836 42,316 Medical equipment 842 842 Construction in process 7,874 9,037 Total $ 258,405 $ 256,906 Less: Accumulated depreciation ( 92,364 ) ( 68,684 ) Total property and equipment, net $ 166,041 $ 188,222 Depreciation expense consists of the following: Year Ended December 31, 2024 2023 2022 Depreciation expense $ 40,677 $ 37,372 $ 28,918 NOTE 5 LEASES The Company leases its office facilities and office equipment which are accounted for as operating leases. Some leases contain clauses for renewal at the Company's option with renewal terms that generally extend the lease term from one to seven years. The components of lease expense for the Company's operating leases in its consolidated statements of operations and comprehensive loss were as follows: Year Ended December 31, 2024 2023 2022 Operating lease costs $ 55,070 $ 56,677 $ 54,217 Variable lease costs and short-term lease costs were no t material. The weighted-average remaining lease term and discount rate for operating lease liabilities included in the consolidated balance sheets are as follows: December 31, 2024 2023 Weighted-average remaining lease term (in years) 4.1 4.6 Weighted-average discount rate 7.50 % 7.11 % Supplemental cash flow information related to operating leases was as follows: Year Ended December 31, 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 64,851 $ 63,363 $ 53,371 Noncash lease activity Right-of-use lease assets obtained in exchange for new operating lease liabilities $ 17,018 $ 16,020 $ 47,837 F- 16 The future minimum lease payments under noncancellable operating leases as of December 31, 2024 are as follows: Year Ended December 31, Amount 2025 $ 62,365 2026 59,569 2027 45,892 2028 32,905 2029 18,169 Thereafter 12,887 Total lease payments $ 231,787 Less: imputed interest ( 33,639 ) Total lease liabilities $ 198,148 Real Estate Optimization and Restructuring Charges In 2023, the Company announced a strategic re-focus, to prioritize resources and close certain centers as a direct result of changes to the Company's business model driven by a shift to more virtual visits initiated by the COVID-19 pandemic. During the year ended December 31, 2023, the Company substantially completed a significant reduction in physical space and exited several underoccupied offices by both negotiating terminations of and abandoning certain real estate leases. The Company accounts for real estate optimization restructuring charges in accordance with ASC 420, Exit or Disposal Cost Obligations and ASC 360-10, Property, Plant, and Equipment . The costs are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2023, the Company recorded $ 10,970 of office space reductions, including primarily of $ 4,734 of right-of-use asset impairment, $ 4,618 of property and equipment disposal and impairment costs, and $ 2,419 of gains related to early lease terminations. The portion of these amounts to be settled by cash disbursements was accounted for as an exit cost liability within other current liabilities and other noncurrent liabilities within the consolidated balance sheets and are not material as of December 31, 2024 and 2023 . NOTE 6 GOODWILL AND INTANGIBLE ASSETS Goodwill The following table summarizes changes in the carrying amount of goodwill: Amount Balance as of December 31, 2022 $ 1,272,939 Business acquisitions (Note 7) 20,733 Measurement period adjustments ( 326 ) Balance as of December 31, 2023 $ 1,293,346 Business acquisitions — Balance as of December 31, 2024 $ 1,293,346 Intangible Assets Intangible assets consist of the following: December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life (Years) Regional trade names $ 36,694 $ ( 35,039 ) $ 1,655 4.0 LifeStance trade names 235,500 ( 48,490 ) 187,010 22.5 Non-competition agreements 94,535 ( 92,401 ) 2,134 4.2 Total intangible assets $ 366,729 $ ( 175,930 ) $ 190,799 December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life (Years) Regional trade names $ 36,694 $ ( 26,399 ) $ 10,295 5.0 LifeStance trade names 235,500 ( 38,024 ) 197,476 22.5 Non-competition agreements 94,535 ( 81,234 ) 13,301 4.2 Total intangible assets $ 366,729 $ ( 145,657 ) $ 221,072 F- 17 Gross carrying amount is based on the fair value of the intangible assets determined at the acquisition date. Total intangible asset amortization expense consists of the following: Year Ended December 31, 2024 2023 2022 Amortization expense $ 30,273 $ 43,065 $ 40,280 The future amortization of intangible assets as of December 31, 2024 is as follows: Year Ended December 31, Amount 2025 $ 13,133 2026 11,385 2027 10,671 2028 10,467 2029 10,467 Thereafter 134,676 Total $ 190,799 NOTE 7 BUSINESS COMBINATIONS During the year ended December 31, 2023, the Company completed the acquisitions of 3 outpatient mental health practices. There were no completed acquisitions during the year ended December 31, 2024. The Company accounted for the acquisitions as business combinations using the acquisition method of accounting. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the respective acquisition dates. Total consideration transferred for these acquisitions consisted of the following: Year Ended December 31, 2023 Cash consideration $ 20,000 Contingent consideration, at initial fair value 1,985 Total consideration transferred $ 21,985 The results of the acquired businesses have been included in the Company’s consolidated financial statements beginning as of their acquisition dates. It is impracticable to provide historical supplemental pro forma financial information along with revenue and earnings subsequent to the acquisition dates for acquisitions during the period due to a variety of factors, including access to historical information and the operations of acquirees being integrated within the Company shortly after closing and not operating as discrete entities within the Company’s organizational structure. Fair Values of Assets Acquired and Liabilities Assumed The following table summarizes the fair values of assets acquired and liabilities assumed as of the dates of acquisition: Year Ended Allocation of Purchase Price December 31, 2023 Cash $ 181 Patient accounts receivable 372 Prepaid expenses and other current assets 138 Property and equipment 221 Right-of-use assets 368 Other noncurrent assets 22 Intangible assets 843 Goodwill 20,733 Total assets acquired 22,878 Total liabilities assumed 893 Fair value of net assets $ 21,985 The majority of the tangible assets acquired and liabilities assumed were recorded at their carrying values as of the respective dates of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and other intangible assets acquired in these acquisitions were estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. The Company developed estimates for the expected future cash flows and discount rates used in the present value calculations. F- 18 The following table summarizes the fair values of acquired intangible assets as of the dates of acquisition: Year Ended December 31, 2023 Regional trade names (1) $ 435 Non-competition agreements (2) 408 Total $ 843 (1) Useful lives for regional trade names are 5 years . (2) Useful lives for non-competition agreements are 5 years . Contingent Consideration Under the provisions of the acquisition agreements, the Company may pay additional cash consideration in the form of earnouts, contingent upon the acquirees achieving certain performance and operational targets (see Note 9). The following table summarizes the maximum contingent consideration based on the acquisition agreements: Year Ended Contingent consideration December 31, 2023 Maximum contingent consideration based on acquisition agreements $ 2,650 Goodwill Goodwill is primarily attributable to the assembled workforce, customer and payor relationships and anticipated synergies and economies of scale expected from the integration of the businesses. The synergies include certain cost savings, operating efficiencies, and other strategic benefits projected to be achieved as a result of the acquisition. All goodwill is deductible for tax purposes. NOTE 8 PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ACCRUED EXPENSES Prepaid expenses and other current assets consist of the following: December 31, 2024 2023 Prepaid bonuses and advances $ 11,011 $ 10,538 Other receivables 223 235 Other current assets 14,903 10,729 Total $ 26,137 $ 21,502 Other accrued expenses consist of the following: December 31, 2024 2023 Patient credits payable $ 18,433 $ 16,158 Accrual for goods/services received, not invoiced 7,396 2,682 Accrued professional fees 6,976 3,503 Other accrued expense 14,137 12,669 Total $ 46,942 $ 35,012 NOTE 9 FAIR VALUE MEASUREMENTS Contingent Consideration The Company measures its contingent consideration liability at fair value on a recurring basis using Level 3 inputs. The Company estimates the fair value of the contingent consideration liability based on the likelihood and timing of the contingent earn-out payments. This valuation incorporates certain assumptions and projections in determining the fair value assigned to such liability. The following is a summary of the significant assumptions used for the fair value measurement of the contingent consideration liability as of December 31, 2023. Valuation Technique Range of Significant Assumptions December 31, 2023 Probability-weighted analysis Probability 0 % - 100 % based earn-outs Discount rate 9.7 % F- 19 As of December 31, 2023, the Company adjusted the fair value of the contingent consideration liability due to remeasurement at the reporting date. Hedging Activities The Company uses derivative financial instruments, including an interest rate swap, for hedging and non-trading purposes to manage its exposure to changes in interest rates. The Company entered into a hedge transaction (interest rate swap) using a derivative financial instrument for the purpose of hedging the Company’s exposure to interest rate risks, which the contractual terms of the hedged instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. The objective of entering into the interest rate swap is to eliminate the variability of cash flows in the Secured Overnight Financing Rate ("SOFR") interest payments associated with the variable-rate loan over the life of the loan. In August 2022, the Company entered into an interest rate swap agreement to pay a fixed rate of 3.24 % on a total notional value of $ 189,000 of debt. As a result of the interest rate swap, 94.5 % of the term loan previously exposed to interest rate risk from changes in SOFR is now hedged against the interest rate swap at a fixed rate. The interest rate swap matures on September 30, 2025. As of December 31, 2024, the notional value was $ 184,748 . As changes in interest rates impact the future cash flow of interest payments, the hedge provides a synthetic offset to interest rate movements. The Company used the income approach to value the derivative for the interest rate swap using observable market data for all significant inputs and standard valuation techniques to convert future amounts to a single present value amount, assuming that participants are motivated but not compelled to transact. This derivative instrument (interest rate swap) is designated and qualifies as a cash flow hedge, with the entire gain or loss on the derivative reported as a component of other comprehensive income. Amounts recorded in accumulated other comprehensive income are released to earnings in the same period that the hedged transaction impacts consolidated earnings within interest expense. The cash flows from the derivative treated as a cash flow hedge are classified in the Company’s consolidated statements of cash flows in the same category as the item being hedged. For the years ended December 31, 2024, 2023 and 2022, the Company included immaterial gains on the hedged instrument (variable-rate borrowings) in the same line item (interest expense, net) as the offsetting gain on the related interest rate swap in the consolidated statements of operations and comprehensive loss. The following table summarizes the location of the interest rate swap in the consolidated balance sheets: December 31, Consolidated balance sheets location 2024 2023 Interest rate swap Prepaid expenses and other current assets $ 1,272 $ — Interest rate swap Other noncurrent assets $ — $ 2,931 The amount of estimated cash flow hedge unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months is not material. Fair Value Measured on a Recurring Basis The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis: December 31, 2024 2023 Assets Measured at Fair Value Money market funds $ 119,616 $ 64,766 Level 1 $ 119,616 $ 64,766 Interest rate swap asset $ 1,272 $ 2,931 Level 2 $ 1,272 $ 2,931 Total assets measured at fair value $ 120,888 $ 67,697 Liabilities Measured at Fair Value Contingent consideration liability: Beginning balance $ 8,169 $ 17,824 Additions related to acquisitions — 1,985 Payments of contingent consideration ( 6,444 ) ( 7,668 ) Gain on remeasurement ( 1,725 ) ( 3,972 ) Ending balance — 8,169 Level 3 — $ 8,169 Total liabilities measured at fair value $ — $ 8,169 F- 20 NOTE 10 LONG-TERM DEBT On May 4, 2022, the Company entered into a credit agreement (as amended, the “2022 Credit Agreement”) among LifeStance Health Holdings, Inc., Lynnwood Intermediate Holdings, Inc., Capital One, National Association, and each lender party thereto. The term loans and delayed draw term loans were payable in quarterly principal and interest payments through May 16, 2028 . On December 19, 2024, the Company entered into a credit agreement (the “2024 Credit Agreement”) among LifeStance Health Holdings, Inc., Lynnwood Intermediate Holdings, Inc., Capital One, National Association, and each lender party thereto. The 2024 Credit Agreement established commitments in respect of a senior secured term loan facility of $ 290,000 and a senior secured revolving loan facility of up to $ 100,000 . The Company borrowed $ 290,000 in term loans, payable in quarterly principal and interest payments, with a maturity date of December 19, 2029 . The loans under the term loan facility bear interest at a rate per annum equal to (x) term SOFR (which term SOFR is subject to a minimum of 0.00 %) plus an applicable margin of 3.00 % subject to stepdowns based on leverage-based metrics or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.50 % above the federal funds effective rate and (iii) one-month term SOFR (which term SOFR is subject to a minimum of 0.00 %) plus 1.00 %) plus an applicable margin of 2.00 % subject to stepdowns based on leverage-based metrics. The term loans are collateralized by substantially all of the assets of the Company. The revolving loan has interest only payments until the maturity date of December 19, 2029 . The proceeds from the 2024 Credit Agreement term loans were used to repay in full and extinguish the 2022 Credit Agreement. In relation to the 2022 Credit Agreement, the Company recognized an extinguishment of debt charge within interest expense of $ 5,032 consisting of the write-off of unamortized debt issue costs associated with the extinguished term loans. The 2024 Credit Agreement requires the Company to maintain compliance with certain restrictive financial covenants related to earnings, leverage ratios, and other financial metrics. The Company was in compliance with all debt covenants at December 31, 2024 and 2023. Long-term debt consists of the following: December 31, 2024 2023 Term loans $ 290,000 $ 197,500 Delayed Draw term loans — 91,994 Total long-term debt 290,000 289,494 Less: Current portion of long-term debt ( 7,250 ) ( 2,925 ) Less: Unamortized discount and debt issue costs (1) ( 2,960 ) ( 6,284 ) Total Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issue Costs $ 279,790 $ 280,285 (1) The unamortized debt issue costs related to long-term debt are presented as a reduction of the carrying amount of the corresponding liabilities on the consolidated balance sheets. Unamortized debt issue costs related to delayed draw term loan commitments and revolving loans are presented within other noncurrent assets on the consolidated balance sheets. The current portion of long-term debt is included within other current liabilities on the consolidated balance sheets. Interest expense, net consists of the following: Year Ended December 31, 2024 2023 2022 Interest expense, net $ 26,535 $ 21,220 $ 19,928 Future principal payments on long-term debt as of December 31, 2024 are as follows: Year Ended December 31, Amount 2025 $ 7,250 2026 14,500 2027 14,500 2028 21,750 2029 232,000 Total $ 290,000 The fair value of long-term debt is based on the present value of future payments discounted by the market interest rates or the fixed rates based on current rates offered to the Company for debt with similar terms and maturities, which is a Level 2 fair value measurement. Long-term debt is presented at carrying value on the consolidated balance sheets. The fair value of long-term debt at December 31, 2024 and 2023 was $ 287,109 and $ 304,955 , respectively. F- 21 Revolving Loan Under the 2022 Credit Agreement, the Company had a revolving loan commitment from Capital One in the amount of $ 50,000 . Under the 2024 Credit Agreement, the Company has a revolving loan commitment in the amount of $ 100,000 . Any borrowing on the revolving loan under the 2024 Credit Agreement is due in full on December 19, 2029 . The revolving loan bears interest at a rate per annum equal to (x) term SOFR (which term SOFR is subject to a minimum of 0.00 %) plus an applicable margin of 3.00 % subject to stepdowns based on leverage-based metrics or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.50 % above the federal funds effective rate and (iii) one-month term SOFR (which term SOFR is subject to a minimum of 0.00 %) plus 1.00 %) plus an applicable margin of 2.00 % subject to stepdowns based on leverage-based metrics. The unused revolving loan incurs a quarterly undrawn commitment fee of 0.45 % per annum subject to stepdowns based on leverage-based metrics. There are no amounts outstanding on the revolving loan as of December 31, 2024 and 2023 . NOTE 11 STOCK-BASED COMPENSATION 2021 Equity Incentive Plan Effective June 9, 2021, the Company’s Board of Directors (the "Board") and its stockholders as of that date adopted and approved the LifeStance Health Group, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”). All equity-based awards subsequent to June 9, 2021 will be granted under the 2021 Equity Incentive Plan. The 2021 Equity Incentive Plan permits the grant of awards of restricted or unrestricted common stock, stock options, stock appreciation rights, restricted stock units, performance awards, and other stock-based awards to employees and directors of, and consultants and advisors to, the Company and its affiliates. The maximum number of shares of the Company’s common stock that may be delivered in satisfaction of awards under the 2021 Equity Incentive Plan was initially reserved at 47,037 shares. The share pool will automatically increase on January 1 of each year through and including 2031 by the lesser of (i) five percent of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the Board on or prior to such date for such year. On January 1, 2024, the number of shares of common stock reserved and available for issuance under the 2021 Equity Incentive Plan increased by 18,936 shares. Restricted Stock The following is a summary of RSA transactions as of and for the years ended December 31, 2024 and 2023: Unvested Shares Weighted-Average Grant Date Fair Value Unvested, December 31, 2022 16,796 $ 11.98 Vested ( 9,247 ) 11.98 Forfeited ( 2,070 ) 11.98 Unvested, December 31, 2023 5,479 $ 11.98 Vested ( 13 ) 11.98 Forfeited ( 3,211 ) 11.98 Unvested, December 31, 2024 2,255 $ 11.98 Restricted Stock Units The following is a summary of RSU transactions as of and for the years ended December 31, 2024 and 2023: Unvested Shares Weighted-Average Grant Date Fair Value Outstanding, December 31, 2022 14,203 $ 10.61 Granted 17,885 6.11 Vested ( 4,831 ) 11.94 Canceled and forfeited ( 3,879 ) 8.49 Outstanding, December 31, 2023 23,378 $ 7.24 Granted 13,671 6.92 Vested ( 7,221 ) 8.38 Canceled and forfeited ( 5,825 ) 7.19 Outstanding, December 31, 2024 24,003 $ 6.72 F- 22 Stock Options The following is a summary of stock option activity as of and for the years ended December 31, 2024 and 2023: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding, December 31, 2022 13,476 $ 7.42 9.70 $ — Granted — — Exercised — — Canceled and forfeited — — Outstanding, December 31, 2023 13,476 $ 7.42 8.70 $ 5,565 Granted — — Exercised — — — Canceled and forfeited — — Outstanding, December 31, 2024 13,476 $ 7.42 6.43 $ 2,300 Exercisable at December 31, 2024 2,246 $ 7.42 6.46 $ 383 Vested or expected to vest at December 31, 2024 13,476 $ 7.42 6.43 $ 2,300 The total grant-date fair value of stock options granted during the year ended December 31, 2022 was $ 56,917 . The Company estimated the fair value of stock option grants with time-based vesting conditions using a Black-Scholes option-pricing model with the following assumptions presented on a weighted-average basis: Year Ended December 31, 2022 Risk-free interest rate 3.22 % Volatility 55.00 % Expected term (years) 6.25 Expected dividend yield 0.00 % Estimated fair value per option granted $ 4.13 The Company estimated the fair value of stock option grants with time- and market-based vesting conditions using a Monte Carlo simulation that incorporate estimates of the potential outcomes of the market condition on the grant with the following assumptions: Year Ended December 31, 2022 Risk-free interest rate 3.22 % Volatility 55.00 % Expected service period (years) 2.76 Expected dividend yield 0.00 % Weighted-average fair value per option granted $ 4.27 The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company lacks company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The Company determines the expected term of time-based vesting condition options using the simplified method which is used when there is insufficient historical data about exercise patterns. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method. The expected service period of the time- and market-based vesting condition options is based on projected exercise dates resulting from the Monte Carlo simulation for each award tranche. F- 23 Stock-Based Compensation Expense The Company recognized stock-based compensation expense related to RSAs, RSUs, and stock options within general and administrative expenses in the consolidated statements of operations and comprehensive loss as follows: Year Ended December 31, 2024 2023 2022 Stock-based compensation expense $ 76,172 $ 99,388 $ 187,430 As of December 31, 2024, the Company had $ 111,957 in unrecognized compensation expense related to all non-vested RSUs and stock options that will be recognized over the weighted-average remaining service period of 1.2 years. 2021 Employee Stock Purchase Plan Effective June 9, 2021, the Board and its stockholders as of that date adopted and approved the LifeStance Health Group, Inc. 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP permits the grant to eligible employees of the Company and its participating subsidiaries of options to purchase shares of the Company’s common stock. The aggregate number of shares of the Company common stock available for purchase pursuant to the exercise of options under the ESPP was 6,817 shares, plus an automatic annual increase, as of January 1 of each year beginning in 2022 and continuing through and including 2031, equal to the lesser of (i) one percent of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the Board on or prior to such date for such year, up to a maximum of 42,500 shares of the Company’s common stock in the aggregate. On January 1, 2024, the number of shares of common stock reserved and available for issuance under the ESPP increased by 3,787 shares. The ESPP allows participants to purchase common stock through payroll deductions of up to 15 % of their eligible compensation. The purchase price of the shares will be 85 % of the lower of the fair market value of the Company’s common stock on the grant date or the exercise date. The ESPP will generally be implemented by a series of separate offerings referred to as “Option Periods”. Unless otherwise determined by the administrator, the Option Periods will be successive periods of approximately six months commencing on the first business day in January and July of each year, anticipated to be on or around January 1 and July 1, and ending approximately six months later on the last business day in June or December, as applicable, of each year, anticipated to be on or around June 30 and December 31. The last business day of each Option Period will be an “Exercise Date”. The administrator may change the Exercise Date, the commencement date, the ending date and the duration of each Option Period, in each case, to the extent permitted by Section 423 of the Internal Revenue Code; provided, however, that no option may be exercised after 27 months from its grant date. As of December 31, 2024 and 2023 , no shares of common stock have been purchased under the Company’s ESPP. NOTE 12 INCOME TAXES Benefit from Income Taxes The benefit from income taxes is comprised of the following components: Year Ended December 31, 2024 2023 2022 Current: Federal $ 463 $ — $ — State 325 1,589 ( 433 ) Total current 788 1,589 ( 433 ) Deferred: Federal 836 ( 17,134 ) ( 12,364 ) State ( 1,794 ) ( 4,776 ) ( 4,369 ) Total deferred ( 958 ) ( 21,910 ) ( 16,733 ) Total income tax benefit $ ( 170 ) $ ( 20,321 ) $ ( 17,166 ) F- 24 The net deferred tax assets and liabilities consist of the following: December 31, 2024 2023 Deferred tax assets Accruals and reserves $ 5,988 $ 3,347 Net operating losses 41,015 48,218 Stock-based compensation 11,723 11,936 Interest limitation 15,910 12,102 Charitable contributions 2,422 2,639 Operating lease liabilities 50,632 59,970 Gross deferred tax assets 127,690 138,212 Valuation allowance ( 18,951 ) ( 14,974 ) Net deferred tax assets 108,739 123,238 Deferred tax liabilities Property and equipment ( 22,707 ) ( 29,101 ) Intangible assets ( 62,634 ) ( 64,940 ) Right-of-use assets ( 37,727 ) ( 44,769 ) Gross deferred tax liabilities ( 123,068 ) ( 138,810 ) Net deferred tax liability $ ( 14,329 ) $ ( 15,572 ) The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before benefit from income taxes as follows: Year Ended December 31, 2024 2023 2022 Amount % Amount % Amount % Tax provision at U.S. federal statutory rate $ ( 12,099 ) 21.0 % $ ( 43,382 ) 21.0 % $ ( 48,873 ) 21.0 % State income taxes, net of federal benefit ( 1,193 ) 2.1 % ( 5,705 ) 2.8 % ( 4,183 ) 1.8 % Stock-based compensation 3,701 ( 6.4 %) 4,343 ( 2.1 %) 27,014 ( 11.6 %) IRC Section 162M limitation 5,070 ( 8.8 %) 10,458 ( 5.1 %) 5,685 ( 2.4 %) Valuation allowance 3,977 ( 6.9 %) 13,549 ( 6.6 %) 1,424 ( 0.6 %) Other adjustments 374 ( 0.7 %) 416 ( 0.2 %) 1,767 ( 0.8 %) Total $ ( 170 ) 0.3 % $ ( 20,321 ) 9.8 % $ ( 17,166 ) 7.4 % Differences between the statutory rate are primarily the result of permanent book/tax differences between non-deductible equity awards, valuation allowance activity and state income taxes. As of December 31, 2024, the Company has $ 164,547 of federal net operating loss carryforwards and $ 137,180 of state net operating loss carryforwards. As of December 31, 2023, the Company has $ 191,668 of federal net operating loss carryforwards and $ 163,177 of state net operating loss carryforwards. $ 436 federal net operating loss carryforwards begin to expire in 2037, and the remaining federal net operating loss carryforwards have no expiration. The state net operating loss carryforwards begin to expire in 2028. Under Section 382 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits (under IRC Section 383), in any taxable year may be limited if it experiences an ownership change. The Company completed an analysis of Section 382 ownership changes in its stock through April 12, 2024 and concluded that the Company has experienced ownership changes that will result in limitations in its ability to use certain of its net operating loss carryforwards. The Company may experience ownership changes in the future as a result of future transactions in its stock. If it is determined that the Company undergoes one or more ownership changes in the future, then the Company’s ability to utilize its federal and state net operating loss carryforwards or other tax attributes may be limited or eliminated. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2024 and 2023, the Company had a valuation allowance of $ 18,951 and $ 14,974 , respectively, against a portion of its charitable contribution carryforward and net operating loss carryforwards for which realization cannot be considered more likely than not at this time. The valuation allowance increased by $ 3,977 and $ 13,549 for the years ended December 31, 2024 and 2023, respectively. F- 25 Uncertain Income Tax Positions The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions in the United States where applicable. The Company's tax returns are still open under the U.S. statute from 2019 to the present. Earlier years may be examined to the extent that loss carryforwards are used in future periods. There are no tax matters under discussion with taxing authorities that are expected to have a material effect on the Company’s consolidated financial statements. The Company had no amounts accrued for interest and penalties related to tax contingencies for the years ended December 31, 2024 and 2023 . NOTE 13 COMMITMENTS AND CONTINGENCIES Professional Liability Insurance The Company's medical malpractice insurance coverage is subject to a $ 3,000 per claim limit and an annual aggregate shared limit of $ 8,000 . Should the claims-made policy not be renewed or replaced with equivalent insurance, claims based on occurrences during its term, but reported subsequently, would be uninsured. The Company is not aware of any unasserted claims, unreported incidents, or claims outstanding that are expected to exceed malpractice insurance coverage limits as of December 31, 2024 and 2023. Healthcare Industry The healthcare industry is subject to numerous laws and regulations of federal, state, and local governments. These laws and regulations include, but are not necessarily limited to, matters such as licensure, accreditation, and government healthcare program participation requirements, reimbursement for patient services, and Medicare fraud and abuse. Recently, government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers. Violation of these laws and regulations could result in expulsion from government healthcare programs together with imposition of significant fines and penalties, as well as significant repayments for patient services billed. Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. As a result of investigations by governmental agencies, various healthcare companies have received requests for information and notices regarding alleged noncompliance with those laws and regulations, which, in some instances, have resulted in companies entering into significant settlement agreements. Compliance with such laws and regulations may also be subject to future government review and interpretation as well as significant regulatory action, including fines, penalties, and potential exclusion from the related programs. There can be no assurance that regulatory authorities will not challenge the Company’s compliance with these laws and regulations, and it is not possible to determine the impact (if any) such claims or penalties would have upon the Company. In addition, the contracts the Company has with commercial payors also provide for retroactive audit and review of claims. Management believes that the Company is in substantial compliance with fraud and abuse as well as other applicable government laws and regulations. While no regulatory inquiries have been made, compliance with such laws and regulations is subject to government review and interpretation, as well as regulatory actions unknown or unasserted at this time. General Contingencies The Company is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions, injuries to employees, and natural disasters. These risks are covered by commercial insurance purchased from independent third parties. There has been no significant reduction in insurance coverage from the previous year in any of the Company’s policies. Litigation The Company may be involved from time-to-time in legal actions relating to the ownership and operations of its business. Liabilities related to loss contingencies are recognized when the Company believes it is probable a liability has occurred and the amount can be reasonably estimated by management. On April 26, 2023, a class action litigation captioned Strong v. LifeStance Health Group, Inc. was filed in the United States District Court for the District of Arizona against the Company by a putative class representing users of the Company's website who allege various privacy-related claims premised on the Company's use of pixel technologies on its website. The lawsuit seeks unspecified monetary damages. The process of resolving these matters is inherently uncertain and may develop over an extended period of time; therefore, at this time, the ultimate resolution cannot be predicted. The Company has not recorded any material accruals for loss contingencies and in management's opinion no material range of loss is estimable for this matter as of December 31, 2024 . F- 26 NOTE 14 NET LOSS PER SHARE The following table presents the calculation of basic and diluted net loss per share (“EPS”) for the Company’s common shares: Year Ended December 31, 2024 2023 2022 Net loss available to common stockholders' $ ( 57,443 ) $ ( 186,262 ) $ ( 215,564 ) Weighted-average shares used to compute basic and diluted net loss per share 379,147 367,457 355,278 Net loss per share, basic and diluted $ ( 0.15 ) $ ( 0.51 ) $ ( 0.61 ) The Company has issued potentially dilutive instruments in the form of RSAs, RSUs and stock options. The Company did not include any of these instruments in its calculation of diluted loss per share for the years ended December 31, 2024, 2023 and 2022 because to include them would be anti-dilutive due to the Company’s net loss during the period. See Note 11 for the issued, vested and unvested RSAs, RSUs and stock options. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share: As of December 31, 2024 2023 2022 RSAs 2,255 5,479 16,796 RSUs 24,003 23,378 14,203 Stock options 13,476 13,476 13,476 39,734 42,333 44,475 F- 27