I am still using my old Squeezebox Touch from years ago, and all my music is kept in FLAC format. The LMS is residing in my i7 desktop PC, and streaming via LAN connection and via a Gbit switch next to the Squeezebox Touch. External DAC is used.
I tried streaming in native FLAC format and using the LMS to convert the file to PCM before streaming to compare, they do sound very different. I prefer PCM streaming.
As ootg and Boxerfan88 mentioned, the important point is where you 'decompress' the lossless file and nothing to do with the file format. There maybe some streamer that can accept the native FLAC file and decompress it without affecting the sound, it all depends on how they implement it. I think my Squeezebox Touch processor is rather slow and weak.
Streaming via wired or wireless also can make the sound different. In most cases, wireless streaming sound worse due to the streamers need to work harder.