Hims & Hers Health, Inc. — Form 8-K Summary
Reporting date: September 30, 2020; filed October 1, 2020. The registrant was Oaktree Acquisition Corp. (OAC), which entered into a definitive agreement to combine with Hims, Inc. This filing reports a proposed business combination rather than periodic operating results.
Business Context and Transaction
- OAC agreed to acquire Hims through a merger following OAC’s domestication as a Delaware corporation.
- OAC will change its name to Hims & Hers Health, Inc.; Hims will continue as a wholly owned subsidiary after closing.
- The transaction was approved by both companies’ boards and was expected to close in the fourth quarter of 2020, subject to shareholder, regulatory, listing and other customary conditions.
- The implied equity value was approximately $1.6 billion, with up to $75 million of cash consideration payable to Hims stockholders at Hims’s election, plus the aggregate exercise price of Hims options and warrants.
Capitalization, Financing and Other Key Terms
| Item | Terms disclosed |
|---|---|
| PIPE financing | 7.5 million shares of New Hims Class A common stock at $10.00 per share, for gross proceeds of $75 million. |
| Minimum cash condition | Hims’s closing obligation requires at least $200 million of combined trust-account and PIPE proceeds after shareholder redemptions. |
| Minimum net tangible assets | OAC must have at least $5,000,001 of net tangible assets after closing. |
| Earn-out | 16 million earn-out shares or equivalent awards, vesting in equal thirds at stock-price thresholds of $15, $17.50 and $20, subject to the stated trading-period conditions. |
| Voting control | Founder and CEO Andrew Dudum was expected to hold approximately 90% of the combined company’s voting power on a fully diluted basis through Class A and Class V common stock. |
| Equity plans | An equity incentive plan of up to 10% of fully diluted equity, an annual evergreen provision of up to 5%, and an employee stock purchase plan of up to 2%, with an annual evergreen provision of up to 1%. |
The filing does not provide clear values for revenue, profit, operating cash flow, margins, debt, cash balances, or liquidity beyond the transaction-related minimum cash and net tangible asset conditions.
Material Changes Versus the Prior Comparable Period
The filing does not present comparative financial statements or period-over-period operating results. The material development is the execution of the merger agreement, related PIPE financing, sponsor arrangements and proposed change in corporate structure and control.
Guidance, Outlook, Risks and Unusual Items
- Management projected a fourth-quarter 2020 closing, but completion remained conditional and was not guaranteed.
- The merger could be terminated under specified circumstances, including failure to close by March 30, 2021, failure to obtain shareholder or regulatory approvals, uncured breaches, or failure to satisfy minimum cash and listing conditions.
- The Sponsor agreed to vote in favor of the transaction and surrender or forfeit 25% of its Class B ordinary shares and private placement warrants for no consideration.
- Key risks include shareholder redemptions, inability to satisfy the minimum cash requirement, failure to obtain NYSE approval, regulatory or legal proceedings, transaction costs, disruption to Hims’s operations, competition, limited operating history, government regulation, execution of growth plans, and expansion into women’s health.
- The filing contains forward-looking statements regarding the transaction, future revenue, pro forma enterprise value, cash balance, market opportunity and expected benefits. These statements are subject to substantial uncertainty.
- The shares issued in the business combination and PIPE financing were not registered under the Securities Act and were offered in reliance on Section 4(a)(2).
Most Important Facts for Investors to Verify
- Review the eventual Form S-4, proxy statement/prospectus and merger agreement for final consideration, dilution, redemption effects and closing conditions.
- Verify Hims’s historical and projected revenue, profitability, cash flow, cash balance, debt and liquidity, which are not provided clearly in this filing.
- Assess the effect of the 16 million earn-out shares, converted options and warrants, PIPE shares, equity incentive plans and sponsor forfeitures on ownership dilution.
- Evaluate the concentration of voting power, including the expected approximately 90% control held by Andrew Dudum.
- Confirm whether the transaction closed, whether the minimum cash and NYSE listing conditions were satisfied, and whether the proposed Hims & Hers Health, Inc. structure and ticker became effective.