Behavioral health company LifeStance Health (NASDAQ: LFST) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 17.4% year on year to $382.2 million. Guidance for next quarter’s revenue was optimistic at $390 million at the midpoint, 2.4% above analysts’ estimates. Its GAAP profit of $0.03 per share was significantly above analysts’ consensus estimates.

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“2025 was an exceptional year for LifeStance and reflects sustained execution across the organization,” said Dave Bourdon, CEO of LifeStance.

Company Overview

With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ: LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, LifeStance Health Group’s 30.4% annualized revenue growth over the last five years was incredible. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. LifeStance Health Group’s annualized revenue growth of 16.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s revenue dynamics by analyzing its number of clinicians, which reached 8,040 in the latest quarter. Over the last two years, LifeStance Health Group’s clinicians averaged 10% year-on-year growth. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, LifeStance Health Group reported year-on-year revenue growth of 17.4%, and its $382.2 million of revenue exceeded Wall Street’s estimates by 1%. Company management is currently guiding for a 17.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 13.9% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and suggests the market sees success for its products and services.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Although LifeStance Health Group was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 13.2% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, LifeStance Health Group’s operating margin rose by 44.6 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 19.6 percentage points on a two-year basis.

This quarter, LifeStance Health Group generated an operating margin profit margin of 4.7%, up 4.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

LifeStance Health Group’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.

In Q4, LifeStance Health Group reported EPS of $0.03, up from negative $0.02 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects LifeStance Health Group’s full-year EPS of $0.02 to grow 108%.

Key Takeaways from LifeStance Health Group’s Q4 Results

It was good to see LifeStance Health Group beat analysts’ EPS expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 12.7% to $8.05 immediately after reporting.

LifeStance Health Group had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).