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Hims & Hers Health, Inc. Reports Second Quarter 2022 Financial Results and Raises Full Year 2022 Outlook

HIMS

Quarterly revenue of $113.6 million in Q2 2022, up 87% year-over-year

Consumer-centric strategy driving second straight quarterly gain of >100k net new subscriptions, ending Q2 2022 with 817,000 subscriptions, up 80% year-over-year

Raises full year 2022 revenue guidance to the range of $470 million to $485 million and Adjusted EBITDA guidance to the range of $(27) million to $(20) million

Platform demand and financial outperformance driving expected Adjusted EBITDA profitability within the next four quarters

Hims & Hers Health, Inc. (“Hims & Hers”, NYSE: HIMS), the trusted consumer-first platform focused on providing modern personalized health and wellness experiences to consumers, today reported financial results for the second quarter ended June 30, 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220808005661/en/

Hims & Hers CEO Andrew Dudum (Photo: Business Wire)

Hims & Hers CEO Andrew Dudum (Photo: Business Wire)

“Our second quarter results were outstanding. Each day, our platform is enabling deep, emotional, and personalized connections, helping to solve consumer health and wellness challenges with authenticity and at a scale we’ve never seen before,” said Andrew Dudum, CEO and co-founder of Hims & Hers. “For the second straight quarter, we saw record quarterly growth in the number of net new subscriptions, as our flywheel continues to accelerate. It is clear our brands are resonating with consumers, enabling us to build trust and continue to expand our loyal customer base. Given the momentum we’re seeing across the business and the underlying strength of our model, we are increasing our 2022 outlook for revenue and Adjusted EBITDA. At the same time, our ability to drive operational efficiency improvements while scaling our operations positions us to achieve expected Adjusted EBITDA profitability within the next four quarters.”

Key Business Metrics

(In Thousands, Except AOV, Unaudited)

Three months ended June 30,

Six months ended June 30,

2022

2021

Change

2022

2021

Change

AOV

$

78

$

74

$

4

$

78

$

74

$

4

Net Orders

1,385

786

599

2,592

1,473

1,119

As of June 30,

2022

2021

Change

Subscriptions

817

453

364

Revenue

(In Thousands, Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

Change

2022

2021

Change

Online Revenue

$

107,462

$

58,146

$

49,316

$

201,564

$

108,826

$

92,738

Wholesale Revenue

6,101

2,546

3,555

13,313

4,180

9,133

Total revenue

$

113,563

$

60,692

$

52,871

$

214,877

$

113,006

$

101,871

Total revenue year-over-year growth

87

%

69

%

90

%

71

%

Second Quarter 2022 Financial and Business Highlights

  • Revenue was $113.6 million for the second quarter 2022 compared to $60.7 million for the second quarter 2021, an increase of 87% year-over-year.
  • Net loss was $(19.7) million for the second quarter 2022 compared to $(9.2) million for the second quarter 2021.
  • Gross margin was 77% for the second quarter 2022 compared to 78% for the second quarter 2021.
  • Adjusted EBITDA was $(7.5) million for the second quarter 2022 compared to $(4.7) million for the second quarter 2021.
  • Doubled down on commitment to women’s wellness with launch of 6 new Hers Wellness Essentials supplements formulated specifically for women. The new supplement line includes probiotics that support women’s general health, mental wellness, gut health, digestive health and skin health, as well as a daily libido supplement, and are now available at ForHers.com, the Hers App, and select CVS Pharmacy locations nationwide.
  • Launched Hers mobile platform on the iOS App Store, providing a customized, seamless and value-add health and wellness experience tailored for women.

Year to Date 2022 Financial Highlights

  • Revenue was $214.9 million for the six months ended June 30, 2022 compared to $113.0 million for the six months ended June 30, 2021, an increase of 90% year-over-year.
  • Net loss was $(35.9) million for the six months ended June 30, 2022 compared to $(60.6) million for the six months ended June 30, 2021.
  • Gross margin was 75% for the six months ended June 30, 2022 compared to 77% for the six months ended June 30, 2021.
  • Adjusted EBITDA was $(13.6) million for the six months ended June 30, 2022 compared to $(13.2) million for the six months ended June 30, 2021.

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 third quarter 2022, we expect:

  • Revenue to be in the range of $129 million to $132 million.
  • Adjusted EBITDA to be in the range of $(9) million to $(7) million, which would reflect an Adjusted EBITDA margin in the range of (7)% to (5)%.

For the full year 2022, we expect:

  • Revenue to be in the range of $470 million to $485 million.
  • Adjusted EBITDA to be in the range of $(27) million to $(20) million, which would reflect an Adjusted EBITDA margin in the range of (6)% to (4)%.

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 second quarter 2022 results on August 8, 2022, at 5:00 p.m. ET. The conference call can be accessed by dialing +1 (888) 510-2630 for U.S. participants and +1 (646) 960-0137 for international participants, and referencing conference ID #1704296. 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 consumer-first platform transforming the way customers fulfill their health and wellness needs. Its digital platform enables access to treatments for a broad range of conditions, including those related to sexual health, hair loss, dermatology, mental health and primary care. Hims & Hers connects patients to licensed healthcare professionals who can prescribe medications when appropriate. Prescriptions are fulfilled online through licensed pharmacies on a subscription basis, making accessing treatments simple, affordable, and straightforward. Through the Hims & Hers mobile apps, consumers can access a range of educational programs, wellness content, community support, and other services that promote lifelong health and wellness. Hims & Hers products can also be found in tens of thousands of top retail locations in the United States. Launched in November 2017, Hims & Hers serves the entire United States and select locations in the United Kingdom. The company is publicly traded on the New York Stock Exchange. 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 “believe,” “estimate,” “anticipate,” “expect,” “assume,” “imply,” “intend,” “plan,” “may,” “will,” “potential,” “project,” “predict,” “continue,” “could,” or “should,” or, in each case, their plural, 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, including our ability to reach Adjusted EBITDA profitability in the next four quarters; our expected future financial and business performance, including with respect to the Hims & Hers platform, and the underlying assumptions with respect to the foregoing; statements relating to events and trends relevant to us, including with respect to our financial condition, results of operations, short- and long-term business operations, objectives, and financial needs; expectations regarding our mobile applications, market acceptance, user experience, customer retention, our ability to invest and generate a return on any such investment. customer acquisition costs, operating efficiencies, the success of our business model, our ability to scale our business, the growth of certain of our categories and the impact of our acquisitions, our ability to expand the scope of our offerings and experiences, and our ability to comply with the extensive, complex and evolving regulatory requirements applicable to our business, including without limitation state and federal healthcare and privacy laws and regulations. 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 each of our most recently filed Quarterly Report on Form 10-Q, our most recently filed Annual Report on Form 10-K, and any of 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 most recently filed Quarterly Report on Form 10-Q, our most recently filed Annual Report on Form 10-K, and any of 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, and chargebacks, and includes revenue recognition adjustments recorded pursuant to U.S. GAAP, primarily relating to deferred revenue and returns reserve. Online Revenue is generated by selling directly to consumers through our websites and mobile applications. Our Online Revenue consists of products and services purchased by customers directly through our online platform. The majority of our Online Revenue is subscription-based, where customers agree to be billed on a recurring basis to have products and services automatically delivered to them.

“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. Subscriptions are sometimes also referred to by us as “subscription memberships” or “memberships.”

“Wholesale Revenue” represents non-prescription product sales to retailers through wholesale purchasing agreements. We sell only non-prescription products to wholesale partners. In addition to being revenue generative and profitable, wholesale partnerships have the added benefit of generating brand awareness with new customers in physical environments.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

June 30,
2022

December 31,
2021

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

55,033

$

71,784

Short-term investments

139,944

175,490

Inventory

19,673

13,558

Prepaid expenses and other current assets

15,835

9,073

Total current assets

230,485

269,905

Restricted cash

856

856

Goodwill

110,881

110,881

Intangibles, net

23,806

25,890

Operating lease right-of-use assets

4,459

5,111

Other long-term assets

9,478

7,942

Total assets

$

379,965

$

420,585

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

27,093

$

19,640

Accrued liabilities

11,809

12,194

Deferred revenue

2,337

3,188

Earn-out payable

12,972

42,834

Operating lease liabilities

1,412

1,365

Total current liabilities

55,623

79,221

Operating lease liabilities

3,402

4,117

Earn-out liabilities

1,510

1,999

Other long-term liabilities

371

629

Total liabilities

60,906

85,966

Commitments and contingencies

Stockholders' equity:

Common stock – Class A shares, par value $0.0001, 2,750,000,000 shares authorized and 198,472,604 and 196,414,363 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively; Class V shares, par value $0.0001, 10,000,000 shares authorized and 8,377,623 shares issued and outstanding as of June 30, 2022 and December 31, 2021

21

20

Additional paid-in capital

634,388

613,687

Accumulated other comprehensive loss

(468

)

(137

)

Accumulated deficit

(314,882

)

(278,951

)

Total stockholders' equity

319,059

334,619

Total liabilities and stockholders' equity

$

379,965

$

420,585

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Revenue

$

113,563

$

60,692

$

214,877

$

113,006

Cost of revenue

26,387

13,415

52,945

25,482

Gross profit

87,176

47,277

161,932

87,524

Gross margin %

77

%

78

%

75

%

77

%

Operating expenses:(1)

Marketing

60,490

27,944

108,583

54,902

Selling, general, and administrative

46,876

36,740

90,458

98,438

Total operating expenses

107,366

64,684

199,041

153,340

Loss from operations

(20,190

)

(17,407

)

(37,109

)

(65,816

)

Other income:

Change in fair value of liabilities

121

7,963

562

5,282

Other income, net

402

325

722

101

Total other income, net

523

8,288

1,284

5,383

Loss before income taxes

(19,667

)

(9,119

)

(35,825

)

(60,433

)

Provision for income taxes

(12

)

(34

)

(106

)

(124

)

Net loss

(19,679

)

(9,153

)

(35,931

)

(60,557

)

Other comprehensive (loss) income

(145

)

32

(331

)

(29

)

Total comprehensive loss

$

(19,824

)

$

(9,121

)

$

(36,262

)

$

(60,586

)

Net loss per share attributable to common stockholders:

Basic and diluted

$

(0.10

)

$

(0.05

)

$

(0.18

)

$

(0.35

)

Weighted average shares outstanding:

Basic and diluted

203,949,535

191,922,517

203,326,215

172,631,312

______________

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

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Marketing

$

1,072

$

772

$

1,895

$

2,618

Selling, general, and administrative

9,560

8,388

17,593

40,772

Total stock-based compensation expense

$

10,632

$

9,160

$

19,488

$

43,390

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

Six Months Ended June 30,

2022

2021

Operating activities

Net loss

$

(35,931

)

$

(60,557

)

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

Depreciation and amortization

3,562

899

Stock-based compensation

19,488

43,390

Change in fair value of liabilities

(562

)

(5,282

)

Warrant expense in connection with Merger

154

Amortization of debt issuance costs

144

Net amortization on securities

863

560

Benefit for deferred taxes

(258

)

Non-cash operating lease cost

755

756

Non-cash other

58

399

Changes in operating assets and liabilities:

Inventory

(6,115

)

(3,047

)

Prepaid expenses and other current assets

(6,762

)

(4,635

)

Other long-term assets

(27

)

(58

)

Accounts payable

7,453

7,353

Accrued liabilities

150

5,583

Deferred revenue

(851

)

(253

)

Operating lease liabilities

(772

)

(753

)

Earn-out payable

(6,848

)

Net cash used in operating activities

(25,797

)

(15,347

)

Investing activities

Purchases of investments

(89,146

)

(187,521

)

Maturities of investments

101,259

48,421

Proceeds from sales of investments

22,291

1,215

Investment in website and mobile application development and internal-use software

(2,397

)

(1,833

)

Purchases of property, equipment, and intangible assets

(276

)

(122

)

Deferred consideration paid for acquisitions

(459

)

Acquisition of business, net of cash acquired

(748

)

Net cash provided by (used in) investing activities

31,272

(140,588

)

Financing activities

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 related to securities issuances

(12,851

)

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

1,193

Proceeds from exercise of Class A common stock warrants

808

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

1,470

254

Payments for taxes related to net share settlement of equity awards

(1,183

)

(4,458

)

Payments for earn-out consideration for acquisitions

(23,014

)

Proceeds from employee stock purchase plan

553

Net cash (used in) provided by financing activities

(22,174

)

235,605

Foreign currency effect on cash and cash equivalents

(52

)

(19

)

(Decrease) increase in cash, cash equivalents, and restricted cash

(16,751

)

79,651

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

72,640

28,350

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

$

55,889

$

108,001

Reconciliation of cash, cash equivalents, and restricted cash

Cash and cash equivalents

$

55,033

$

107,145

Restricted cash

856

856

Total cash, cash equivalents, and restricted cash

$

55,889

$

108,001

Supplemental disclosures of cash flow information

Cash paid for taxes

$

528

$

227

Non-cash investing and financing activities

Recapitalization from redeemable convertible preferred stock pre-closing stock repurchase

$

$

125

Conversion of redeemable convertible preferred stock to common stock

249,837

Assumption of Merger warrants liability

51,814

Exercise of Private Placement Warrants and Public Warrants

20,872

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

1,160

Vesting of early exercised stock options

76

106

Common stock issued, contingent consideration, and payables for acquisition of business

4,064

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. GAAP, we present Adjusted EBITDA (which is a non-GAAP financial measure), and Adjusted EBITDA margin (which is a non-GAAP ratio), each as defined below. We use Adjusted EBITDA and Adjusted EBITDA margin to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA and Adjusted EBITDA margin, when taken together with the corresponding U.S. GAAP financial measures, provide 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 and Adjusted EBITDA margin to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA and Adjusted EBITDA margin is helpful to our investors as they are 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 or ratios differently or may use other financial measures or ratios to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA or Adjusted EBITDA margin as tools for comparison. Reconciliations are provided below to the most directly comparable financial measures stated in accordance with U.S. GAAP. Investors are encouraged to review our U.S. GAAP financial measures 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 stock-based compensation, depreciation and amortization, acquisition-related costs, provision for income taxes, interest income, 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 amortization of debt issuance costs. “Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by revenue.

Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. We compensate for these limitations by providing specific information regarding the U.S. GAAP items excluded from Adjusted EBITDA. When evaluating our performance, you should consider Adjusted EBITDA in addition to, and not as a substitute for, other financial performance measures, including our net loss and other U.S. GAAP results.

Net Loss to Adjusted EBITDA Reconciliation

(In Thousands, Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2022

2021

2022

2021

Revenue

$

113,563

$

60,692

$

214,877

$

113,006

Net loss

(19,679

)

(9,153

)

(35,931

)

(60,557

)

Stock-based compensation

10,632

9,160

19,488

43,390

Depreciation and amortization

1,821

505

3,562

899

Acquisition-related costs

150

2,872

266

2,872

Provision for income taxes

12

34

106

124

Change in fair value of liabilities

(121

)

(7,963

)

(562

)

(5,282

)

Interest income

(356

)

(113

)

(531

)

(195

)

Merger bonuses

5,219

Warrant expense in connection with Merger

154

Amortization of debt issuance costs

144

Adjusted EBITDA

$

(7,541

)

$

(4,658

)

$

(13,602

)

$

(13,232

)

Net loss as a % of revenue

(17

)%

(15

)%

(17

)%

(54

)%

Adjusted EBITDA margin

(7

)%

(8

)%

(6

)%

(12

)%