LifeStance Health Group (Nasdaq: LFST) reported its second profitable quarter as a public company in the third quarter of 2025.
Executives for the hybrid in-person and telehealth outpatient mental health company said the profitable turn was driven by the realization of clinician productivity improvements, tamping down general and administrative expenses and top-flight net growth in new clinicians joining the organization.
“This was a quarter of records for LifeStance,” CEO Dave Bourdon said on the company’s third-quarter earnings call. “In the third quarter, we achieved the largest improvement of quarterly organic productivity in our company’s history.”
Productivity initiatives that Bourdon highlighted include cash incentives for clinicians to increase availability, a new patient engagement platform, technology to support call center scheduling for patients and AI-automated clinician documentation.
Net income for LifeStance Health totaled about $1.1 million in the third quarter. This represents a major turnaround from the $6 million loss incurred last year. The company posted a profit, in terms of net income, for the first time as a public company in the first quarter of 2025.
The topline also expanded, with quarterly revenue increasing 16% to $364 million.
For the first three quarters of the year, LifeStance Health generated $1.04 billion in revenue and reported a net loss of $2 million. The company’s overall cash position, however, improved by $49 million, or by 32%.
Part of the progress to profitability in 2025 is attributable to LifeStance’s years-long shift from growth to productivity. In 2023, the company started closing clinics. It reported shuttering 82, after originally disclosing its closure goal was 70. The company ended up opening about 10 new clinics in 2024.
Looking to the end of 2025, LifeStance Health CFO Ryan McGroarty said the company is expected to open between 20 and 25 centers this year; down from previous expectation of about 30 in 2025.
Lifestance Health also added 288 net new clinicians in the third quarter, an 11% increase, which brings the company’s clinician headcount to 7,996. Bourdon said the company is still focused on making LifeStance as appealing to new clinicians as possible and keeping them engaged once they are with the company.
One unspecified region of the business has a clinician retention rate of 87%. The company’s goal is mid- to-high 80% range. That unspecified region is the only one to achieve that goal.
“We’ve just got to get the other ones up to that similar level,” Bourdon said. “As we think about the future, we still believe that we can move the needle on clinician retention.”
Bourdon has called clinician retention rates “stubbornly stable.”
The company’s organic growth and productivity gains come as it has all but stalled its M&A activity. The company came into its form through a rapid consolidation of outpatient mental health practices fueled by private equity. On the Thursday earnings call, executives again teased getting back into the M&A game, a strategy they’ve pursued since this time last year.
“We are pleased with our leverage ratios and continue to [deleverage],” McGroarty said. “We have significant financial flexibility to run the business and fully execute on our strategy, including potential acquisitions.”
The company has an undrawn revolving credit line of $100 million to use, added.
Bourdon said the company has a “really good pipeline of opportunities for potential acquisitions that we are working through.” He said valuations for the companies that “make the cut” will have valuations that are “appropriate.”
“We’re being very thoughtful and disciplined,” Bourdon said. “The primary purpose of these acquisitions is for geographic expansion, so establishing beachheads and new MSAs or states. … We feel really good about M&A being complementary to our organic growth. Organic growth is still going to be the primary driver in the coming years.”
Assuming the organic growth and productivity initiatives hold, the resumption of LifeStance’s M&A activity could accelerate the company’s growth in its core business — traditional therapy and psychiatry offerings.
Today, specialty mental health offerings — primarily interventional psychiatry services, such as transcranial magnetic stimulation (TMS) and Sparvato — account for only about $50 million in revenue per year. At some point, it will become a larger portion of the LifeStance business. Receptivity from local clinicians and patients has been good, he added, as both parties appreciate the one-stop-shop element of having consolidated services. Plus, these services will have a higher margin than more standard services. Bourdon projected the rate of growth of specialty care will outpace core service lines without offering other specifics.
“While we are pleased with what we’ve accomplished, we feel the best is yet to come,” Bourdon said.
Investments in technology and productivity at LifeStance appear to echo similar news from New York City-based Talkspace’s third-quarter earnings call. The digital-only mental health company reported “record revenues” and a profitable quarter driven by improvements in patient retention and activation.