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Hims & Hers Health, Inc. Reports Third Quarter 2021 Financial Results

Q3 2021 revenue grows 79% year-over-year to $74.2 million

Q3 2021 ending member subscriptions grow 95% year-over-year to 551,000

Exceeds Q3 2021 revenue guidance, raises full year 2021 guidance

Hims & Hers Health, Inc. (“Hims & Hers”, NYSE: HIMS), a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals, today reported financial results for the third quarter ending September 30, 2021.

“This latest quarter of results shows that our vision to create a new front door to healthcare is resonating,” said Andrew Dudum, CEO and co-founder of Hims & Hers. “Not only did we deliver strong revenue growth in Q3, we did so while maintaining customer acquisition costs quarter-to-quarter, nearly doubling total subscriptions year-over-year, and delivering on strategic initiatives to catalyze future growth. We believe we are very well positioned to deliver on our ambitious mission.”

Key Business Metrics

(In Thousands, Except AOV, Unaudited)

 

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

 

 

 

 

 

 

 

 

 

AOV (three months period)

$

74

 

 

$

74

 

 

$

74

 

 

$

69

 

 

$

67

 

Net Orders (three months period)

968

 

 

786

 

 

687

 

 

579

 

 

582

 

Subscriptions (end of period)

551

 

 

453

 

 

391

 

 

312

 

 

283

 

Revenue

(In Thousands, Unaudited)

 

 

Three Months Ended

 

September 30,

2021

 

June 30,

2021

 

March 31,

2021

 

December 31,

2020

 

September 30,

2020

 

 

 

 

 

 

 

 

 

 

Online Revenue

$

72,032

 

 

$

58,146

 

 

$

50,680

 

 

$

40,091

 

 

$

38,829

 

Wholesale Revenue

2,141

 

 

2,546

 

 

1,634

 

 

1,375

 

 

2,495

 

Total revenue

$

74,173

 

 

$

60,692

 

 

$

52,314

 

 

$

41,466

 

 

$

41,324

 

Total revenue year-over-year growth

79

%

 

69

%

 

74

%

 

67

%

 

91

%

  • Revenue was $74.2 million for the third quarter 2021 compared to $41.3 million for the third quarter 2020, an increase of 79% year-over-year.
  • Net loss was $(15.9) million for the third quarter 2021 compared to $(5.9) million for the third quarter 2020.
  • Gross margin was 74% for the third quarter 2021 compared to 76% for the third quarter 2020.
  • Adjusted EBITDA was $(9.8) million for the third quarter 2021 compared to $(1.6) million for the third quarter 2020.

A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net loss, its most comparable financial measure under generally accepted accounting principles in the United States (“U.S. GAAP”), has been provided in this press release in the accompanying tables. Additional information about Adjusted EBITDA is also included below under the heading “Non-GAAP Financial Measures”.

Financial Outlook

Hims & Hers provides guidance based on current market conditions and expectations for revenue and Adjusted EBITDA, which is a non-GAAP financial measure.

For the fourth quarter 2021, we expect:

  • Revenue to be in the range of $76 million to $78 million.
  • Adjusted EBITDA to be in the range of $(12) million to $(14) million.

For the full year 2021, we expect:

  • Revenue to be in the range of $263 million to $265 million.
  • Adjusted EBITDA to be in the range of $(35) million to $(37) million.

The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to the “Cautionary Note Regarding Forward-Looking Statements” safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

We have not reconciled forward-looking Adjusted EBITDA to its most directly comparable U.S. GAAP measure, net loss, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations, including market-related assumptions that are not within our control, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net loss. See “Non-GAAP Financial Measures” for additional important information regarding Adjusted EBITDA.

Conference Call

Hims & Hers will host a conference call to review the third quarter 2021 results on November 10, 2021, at 5:00 p.m. ET. The conference call can be accessed by dialing (833) 900-2256 for U.S. participants and (236) 714-2727 for international participants, and referencing conference ID #6691217. A live audio webcast will be available online at https://investors.forhims.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call at the same link.

About Hims & Hers Health, Inc.

Hims & Hers is a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals, enabling them to access high-quality medical care for numerous conditions related to primary care, mental health, sexual health, dermatology, and more. Launched in November 2017, the company also offers thoughtfully created and curated health and wellness products. With products and services available across all 50 states and Washington, D.C., Hims & Hers is able to provide access to quality, convenient and affordable care for all Americans. Hims & Hers was founded by CEO Andrew Dudum, Hilary Coles, Jack Abraham and Joe Spector at venture studio Atomic in San Francisco, California. For more information about Hims & Hers, please visit forhims.com and forhers.com.

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our financial outlook and guidance, our expected future financial and business performance, the assumptions underlying such statements, statements about events and trends including events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs, our expectations regarding market acceptance, user experience, the success of our business model, the growth of certain of our categories and the impact of our recent acquisitions, our ability to expand the scope of our offerings, and our ability to comply with the extensive, complex and evolving regulatory requirements applicable to the healthcare industry. These statements are based on management’s current expectations, but actual results may differ materially due to various factors.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the “Risk Factors” section of our most recently filed Annual Report on Form 10-K for the year ended December 31, 2020, as amended, our most recent Quarterly Report on Form 10-Q, and our subsequent filings with the Securities and Exchange Commission (the “Commission”).

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in reports we have filed or will file with the Commission, including our annual report on Form 10-K for the year ended December 31, 2020, as amended, our most recent Quarterly Report on Form 10-Q, and our subsequent filings with the Commission. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in such reports, those results or developments may not be indicative of results or developments in subsequent periods.

Key Business Metrics

Average Order Value (“AOV”) is defined as Online Revenue divided by Net Orders (each as defined below).

“Net Orders” are defined as the number of online customer orders minus transactions related to refunds, credits, chargebacks and other negative adjustments. Net Orders represent transactions made on our platform during a defined period of time and exclude revenue recognition adjustments recorded pursuant to U.S. GAAP.

“Online Revenue” represents the sales of products and services on our platform, net of refunds, credits, chargebacks and includes revenue recognition adjustments recorded pursuant to U.S. GAAP, primarily relating to deferred revenue and returns reserve.

“Subscriptions” are defined as the number of customer agreements where the customer has agreed to be automatically billed on a recurring basis at a defined cadence. The billing cadence is typically defined as a number of months (for example, billed every month or every three months). Subscriptions are excluded from our reporting when payment has not occurred at the contracted billing cadence. Subscription billing is preferred by many of our customers because most of the products and services we make available treat chronic conditions and these product and service offerings are most effective when taken consistently and continuously. Customers can cancel subscriptions in between billing periods to stop receiving additional products and services and can reactivate subscriptions to continue receiving additional products and services.

“Wholesale Revenue” represents non-prescription product sales to retailers through wholesale purchasing agreements.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

 

 

September 30,

2021

December 31,

2020

 

(Unaudited)

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

64,772

 

$

27,344

 

Short-term investments

 

187,653

 

 

72,864

 

Inventory

 

10,858

 

 

3,543

 

Prepaid expenses and other current assets

 

10,950

 

 

5,404

 

Deferred transaction costs

 

 

 

3,929

 

Total current assets

 

274,233

 

 

113,084

 

Restricted cash

 

856

 

 

1,006

 

Other long-term assets

 

7,167

 

 

4,548

 

Intangibles, net

 

26,932

 

 

59

 

Goodwill

 

110,881

 

 

 

Total assets

$

420,069

 

$

118,697

 

Liabilities, mezzanine equity, and stockholders' equity (deficit)

 

 

Current liabilities:

 

 

Accounts payable

$

16,094

 

$

8,066

 

Accrued liabilities

 

11,206

 

 

4,984

 

Deferred revenue

 

1,993

 

 

1,272

 

Earn-out liabilities

 

23,205

 

 

 

Warrant liabilities

 

 

 

906

 

Total current liabilities

 

52,498

 

 

15,228

 

Earn-out liabilities

 

11,200

 

 

 

Other long-term liabilities

 

1,218

 

 

381

 

Total liabilities

 

64,916

 

 

15,609

 

Commitments and contingencies

 

 

Mezzanine equity:

 

 

Redeemable convertible preferred stock par value $0.0001, 275,000,000 and 95,997,674 shares authorized and nil and 93,328,118 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively; liquidation preference of nil and $268,452 as of September 30, 2021 and December 31, 2020, respectively

 

 

 

249,962

 

Total mezzanine equity

 

 

 

249,962

 

Stockholders' equity (deficit):

 

 

Common stock – Class A shares, par value $0.0001, 2,750,000,000 and 166,696,759 shares authorized and 195,439,626 and 46,025,754 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively; Class V shares, par value $0.0001, 10,000,000 shares authorized and 8,377,623 shares issued and outstanding as of September 30, 2021; Class F shares, par value $0.0001, 6,941,352 shares authorized, issued, and outstanding as of December 31, 2020

 

20

 

 

 

Additional paid-in capital

 

602,975

 

 

24,429

 

Accumulated other comprehensive loss

 

(52

)

 

(11

)

Accumulated deficit

 

(247,790

)

 

(171,292

)

Total stockholders' equity (deficit)

 

355,153

 

 

(146,874

)

Total liabilities, mezzanine equity, and stockholders' equity (deficit)

$

420,069

 

$

118,697

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In Thousands, Except Share and Per Share Data, Unaudited)

 

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2021

2020

2021

2020

Revenue

$

74,173

 

$

41,324

 

$

187,179

 

$

107,291

 

Cost of revenue

 

19,301

 

 

10,047

 

 

44,783

 

 

29,733

 

Gross profit

 

54,872

 

 

31,277

 

 

142,396

 

 

77,558

 

Gross margin %

 

74

%

 

76

%

 

76

%

 

72

%

 

 

 

 

 

Operating expenses:(1)

 

 

 

 

Marketing

 

38,293

 

 

15,102

 

 

93,195

 

 

39,675

 

Selling, general, and administrative

 

44,240

 

 

19,496

 

 

142,678

 

 

48,401

 

Total operating expenses

 

82,533

 

 

34,598

 

 

235,873

 

 

88,076

 

Loss from operations

 

(27,661

)

 

(3,321

)

 

(93,477

)

 

(10,518

)

 

 

 

 

 

Other income (expense):

 

 

 

 

Change in fair value of liabilities

 

8,328

 

 

(2,527

)

 

13,610

 

 

(2,477

)

Interest expense

 

 

 

 

 

 

 

(10

)

Other income, net

 

219

 

 

8

 

 

320

 

 

223

 

Total other income (expense), net

 

8,547

 

 

(2,519

)

 

13,930

 

 

(2,264

)

Loss before income taxes

 

(19,114

)

 

(5,840

)

 

(79,547

)

 

(12,782

)

Benefit (provision) for income taxes

 

3,173

 

 

(31

)

 

3,049

 

 

(103

)

Net loss

 

(15,941

)

 

(5,871

)

 

(76,498

)

 

(12,885

)

Other comprehensive (loss) income

 

(12

)

 

6

 

 

(41

)

 

(12

)

Total comprehensive loss

$

(15,953

)

$

(5,865

)

$

(76,539

)

$

(12,897

)

 

 

 

 

 

Net loss per share attributable to common stockholders:

 

 

 

 

Basic and diluted

$

(0.08

)

$

(0.16

)

$

(0.42

)

$

(0.36

)

Weighted average shares outstanding:

 

 

 

 

Basic and diluted

 

200,038,761

 

 

35,614,598

 

 

181,867,522

 

 

35,345,972

 

______________

(1) Includes stock-based compensation expense as follows (in thousands):

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2021

2020

2021

2020

Marketing

$

2,328

 

$

261

 

$

4,946

 

$

919

 

Selling, general, and administrative

 

9,541

 

1,153

 

50,313

 

3,824

Total stock-based compensation expense

$

11,869

 

$

1,414

 

$

55,259

 

$

4,743

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

 

 

Nine Months Ended

September 30,

 

2021

2020

Operating activities

 

 

Net loss

$

(76,498

)

$

(12,885

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation and amortization

 

2,445

 

 

692

 

Stock-based compensation

 

55,259

 

 

4,743

 

Change in fair value of liabilities

 

(13,610

)

 

2,477

 

Warrant expense in connection with Merger

 

154

 

 

 

Lease termination expense

 

 

 

1,846

 

Amortization of debt issuance costs

 

144

 

 

251

 

Net amortization on securities

 

1,732

 

 

21

 

Benefit for deferred taxes

 

(3,178

)

 

 

Non-cash other

 

871

 

 

 

Changes in operating assets and liabilities:

 

 

Inventory

 

(6,928

)

 

(735

)

Prepaid expenses and other current assets

 

2,635

 

 

37

 

Other long-term assets

 

(58

)

 

777

 

Accounts payable

 

6,306

 

 

(897

)

Accrued liabilities

 

(794

)

 

1,149

 

Deferred revenue

 

217

 

 

(65

)

Other long-term liabilities

 

(4

)

 

379

 

Net cash used in operating activities

 

(31,307

)

 

(2,210

)

Investing activities

 

 

Purchases of investments

 

(219,361

)

 

(84,015

)

Maturities of investments

 

99,375

 

 

43,790

 

Proceeds from sales of investments

 

3,465

 

 

11,550

 

Acquisition of businesses, net of cash acquired

 

(46,468

)

 

 

Investment in website development and internal-use software

 

(3,242

)

 

(1,651

)

Purchases of property, equipment, and intangible assets

 

(279

)

 

(1,293

)

Net cash used in investing activities

 

(166,510

)

 

(31,619

)

Financing activities

 

 

Proceeds from issuance of redeemable convertible preferred stock

 

 

 

51,927

 

Pre-closing stock repurchase

 

(22,027

)

 

 

Proceeds from issuance of common stock upon Merger

 

197,686

 

 

 

Proceeds from PIPE

 

75,000

 

 

 

Payments for transaction costs

 

(12,851

)

 

(2,074

)

Proceeds from repayment of promissory notes associated with vested and unvested shares

 

1,193

 

 

 

Proceeds from exercise of Class A common stock warrants, net of redemption payments

 

787

 

 

 

Proceeds from exercise of vested and unvested stock options, net of repurchases and cancelations

 

567

 

 

111

 

Repayments of principal on term loan

 

 

 

(1,515

)

Payments for taxes related to net share settlement of equity awards

 

(5,234

)

 

 

Net cash provided by financing activities

 

235,121

 

 

48,449

 

Foreign currency effect on cash and cash equivalents

 

(26

)

 

(11

)

Increase in cash, cash equivalents, and restricted cash

 

37,278

 

 

14,609

 

Cash, cash equivalents, and restricted cash at beginning of period

 

28,350

 

 

22,797

 

Cash, cash equivalents, and restricted cash at end of period

$

65,628

 

$

37,406

 

Supplemental disclosures of cash flow information

 

 

Cash paid for taxes

$

279

 

$

246

 

Cash paid for interest

 

 

 

10

 

Non-cash investing and financing activities

 

 

Expiration of Class A common stock redemption right

$

 

$

4,500

 

Exercise of convertible preferred stock warrants

 

 

 

6,508

 

Recapitalization of redeemable convertible preferred stock from pre-closing stock repurchase

 

125

 

 

 

Conversion of redeemable convertible preferred stock to common stock

 

249,837

 

 

 

Assumption of Merger warrants liability

 

51,814

 

 

 

Redemption/exercise of Class A common stock warrants

 

37,834

 

 

 

Reclassification of deferred transaction costs

 

3,929

 

 

 

Conversion of Series D preferred stock warrants to Class A common warrants

 

1,160

 

 

 

Deferred transaction costs payable

 

 

 

577

 

Purchase of property and equipment included in accounts payable

 

 

 

35

 

Change in transaction costs payable

 

568

 

 

 

Vesting of early-exercised stock options

 

147

 

 

27

 

Common stock issued, contingent consideration, and liabilities assumed in acquisition of businesses

 

99,958

 

 

 

Equity awards classified as prepaid expenses

 

2,625

 

 

 

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. GAAP, we present Adjusted EBITDA (as defined below), a non-GAAP financial measure. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, when taken together with the corresponding U.S. GAAP financial measure, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA is helpful to our investors as it is a metric used by management in assessing the health of our business and our operating performance.

However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. A reconciliation is provided below for Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review net loss and the reconciliation of Adjusted EBITDA to net loss, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. Adjusted EBITDA is defined as net loss before depreciation and amortization, benefit (provision) for income taxes, interest income, interest expense, amortization of debt issuance costs, stock-based compensation, change in fair value of liabilities, one-time bonuses and warrant expense in connection with the combination of Hims, Inc. (“Hims”) and Oaktree Acquisition Corp. (“OAC”), with Hims continuing as the surviving entity and as a wholly-owned subsidiary of OAC, which changed its name to Hims & Hers Health, Inc. (the “Merger”), and acquisition-related costs, which include professional services and consideration paid for employee equity with vesting requirements incurred directly as a result of acquisitions.

Net Loss to Adjusted EBITDA Reconciliation

(In Thousands, Unaudited)

 

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

Net loss

$

(15,941

)

$

(5,871

)

$

(76,498

)

$

(12,885

)

Depreciation and amortization

 

1,546

 

 

300

 

 

2,445

 

 

692

 

(Benefit) provision for income taxes

 

(3,173

)

 

31

 

 

(3,049

)

 

103

 

Interest income

 

(103

)

 

(48

)

 

(298

)

 

(398

)

Interest expense

 

 

 

 

 

 

 

10

 

Amortization of debt issuance costs

 

 

 

84

 

 

144

 

 

251

 

Stock-based compensation

 

11,869

 

 

1,414

 

 

55,259

 

 

4,743

 

Change in fair value of liabilities

 

(8,328

)

 

2,527

 

 

(13,610

)

 

2,477

 

Merger bonuses

 

 

 

 

 

5,219

 

 

 

Warrant expense in connection with Merger

 

 

 

 

 

154

 

 

 

Acquisition-related costs

 

4,342

 

 

 

 

7,214

 

 

 

Adjusted EBITDA

$

(9,788

)

$

(1,563

)

$

(23,020

)

$

(5,007

)

 

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