Business Context and Reporting Period
Oaktree Acquisition Corp. filed this Form 8-K on January 12, 2021, reporting supplemental disclosures related to its proposed business combination with Hims, Inc. The filing is not a periodic financial report and does not present operating results for Hims & Hers Health, Inc. or OAC.
OAC entered into the merger agreement with Hims and Rx Merger Sub, Inc. on September 30, 2020. The proposed transaction was scheduled for shareholder consideration at a special meeting on January 19, 2021. OAC strongly encouraged shareholders to attend the meeting by teleconference because of COVID-19-related health and safety concerns.
Financial Metrics and Liquidity
- The filing does not provide clear figures for revenue, profit, cash flow, margins, debt, liquidity, cash balance, or other operating metrics.
- The filing states that the transaction is subject to maintaining a minimum trust account amount after shareholder redemptions, but it does not provide the applicable amount in this text.
- Credit Suisse and Deutsche Bank would be entitled to deferred underwriting compensation and customary PIPE financing fees, payable at and conditioned upon closing.
Material Changes Versus the Prior Comparable Period
No period-over-period financial comparison is provided. The principal change is the voluntary supplementation of OAC’s definitive proxy statement with additional transaction-process and potential-conflict disclosures.
- OAC stated that its management evaluated more than 300 potential targets, signed nondisclosure agreements with approximately 40 other targets, and submitted nonbinding indications of interest or letters of intent for 12 other targets.
- The supplemental disclosure describes negotiations concerning transaction consideration, governance, registration rights, redemption provisions, incentive equity, the employee stock purchase plan, and board composition.
- OAC disclosed that no current OAC directors or officers would serve as directors or officers of the combined company after closing.
- OAC disclosed that its board did not obtain a third-party valuation or fairness opinion, relying instead on the directors’ experience and analysis.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
OAC stated that it believes the shareholder disclosure claims are without merit and that the original proxy disclosures complied with applicable law. The supplemental disclosures were made to avoid nuisance, cost, distraction, and potential delay, without admitting that additional disclosure was legally required.
- Closing depends on shareholder approval and satisfaction of other transaction conditions, including the minimum trust account requirement after redemptions.
- Potential risks include termination of the merger agreement, litigation, regulatory or structural changes, failure to meet stock exchange listing standards, transaction costs, disruption to Hims’ operations, competition, difficulty managing profitable growth, and retention of key personnel.
- Hims has a limited operating history and is subject to significant governmental regulation.
- Risks also include unsuccessful expansion into additional markets, including women’s health.
- The filing contains forward-looking statements regarding transaction timing, expected benefits, market opportunities, future revenue, pro forma enterprise value, and cash balance; the filing cautions that actual results may differ materially.
- The January 19, 2021 special meeting was to be conducted with teleconference access at the numbers provided in the filing.
Key Facts for Investors to Verify
- Whether OAC shareholders approved the business combination and whether all closing conditions were satisfied.
- The final amount remaining in the trust account after redemptions and the resulting liquidity available to the combined company.
- The deferred underwriting compensation, PIPE financing fees, transaction expenses, and their effect on proceeds.
- The final ownership, governance, voting structure, and equity incentive arrangements of the combined company.
- Any litigation or regulatory developments arising from the shareholder letters or the proposed transaction.
- Hims’ actual historical and subsequent financial results, including revenue growth, profitability, cash burn, and regulatory or market risks, which are not presented in this Form 8-K.