Shares of mental health company LifeStance Health Group, Inc. (LFST) tumbled Thursday after Hindenburg Research said it was short the company.
Hindenburg said in its research note that it feels "LifeStance is a classic example of what happens when private equity meets a 'hot' healthcare sector."
LFST shares are currently down over 8%, trading around the $5.50 mark.
The short-selling firm claims LFST's massive debt is fueling a grinding, while its "metric-focused corporate culture [is] resulting in worse quality of care for patients, a worse environment for clinicians and long-term losses for the average investor."
Hindenburg said LFTS trades at a ~23% premium to its peers in the behavioral health industry despite reporting losses over the last 12 months in its Q3 2023 report.
"We assess that LifeStance will need to raise cash imminently given its latest Q3 '23 results," argues Hindenburg.