Mental Health Is Breaking Out

We have been pounding the table on healthcare recently, and today’s name fits within that theme perfectly.

LifeStance Health $LFST is one of the largest outpatient mental health platforms in the U.S., offering in-person and virtual care across psychiatry, therapy, psychological testing, and other behavioral health services. 

In plain English, this company helps people access mental health care through a national network of more than 8,300 clinicians and more than 550 centers across 33 states.

That matters because demand for mental health care continues to grow, while patients are also looking for more affordable options that are covered by insurance. 

LifeStance is built directly around that trend, using an in-network reimbursement model to provide trusted, affordable, and personalized mental health care at scale.

And the market loves what they're doing.

Since bottoming in early June, LFST has rallied more than 50%, making it one of the hottest stocks in the market over the past month. 

More importantly, the stock is now breaking out above $11, a major level that served as support in 2021, resistance in 2022, and a ceiling ever since.

That breakout pushes LFST to its highest level since 2021 and appears to put the finishing touches on a massive bearish-to-bullish reversal pattern.

So long as LFST holds above $11, the path of least resistance is decisively higher for the foreseeable future. 

And when we turn to the earnings scorecard, the story gets even better.

LifeStance reported $403.5 million in revenue last quarter, up 21% YoY.

Meanwhile, adjusted EBITDA increased 48% YoY. 

The company also grew visit volumes by 18%, added 309 net clinicians during the quarter, and raised full-year guidance across revenue, center margin, and adjusted EBITDA.

That's exactly the kind of fundamental acceleration we want to see behind a major technical breakout.

But the earnings sentiment may be the most important part of the story.

Over the past three quarters, LFST has posted three straight positive earnings reactions, including a 29.9% rally in November, a 3.8% rally in February, and a 20.2% rally after its latest report.

That's the market telling us investors are willing to reward this company for its earnings reports. 

So when we step back and look at LifeStance through our fusion analysis process, the message is unmistakably bullish. 

The technicals are breaking out.

The fundamentals are accelerating.

And earnings sentiment is firmly in a bullish regime.

That checks all three boxes for us here at the Beat Report, and it's exactly why we continue to believe healthcare is one of the most important groups to watch as this rotation develops.

We're looking for stocks with the strongest technicals, fundamentals, and earnings sentiment in the market. 

And when we put on a new trade, Beat Report members will be the first to know.

Cheers,

-The Beat Team