Hims & Hers Health, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed February 27, 2023. The filing is an annual report, not a standalone fourth-quarter report. Hims & Hers operates a consumer telehealth and health-and-wellness platform, with primarily subscription-based online sales and a smaller wholesale business.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $526.9 million | $271.9 million |
| Online revenue | $502.5 million | $259.2 million |
| Wholesale revenue | $24.4 million | $12.7 million |
| Gross profit / margin | $408.7 million / 78% | $204.5 million / 75% |
| Operating expenses | $477.4 million | $319.5 million |
| Operating loss | $68.7 million | $115.0 million |
| Net loss | $65.7 million | $107.7 million |
| Adjusted EBITDA / margin | $(15.8) million / (3%) | $(30.1) million / (11%) |
| Net cash used in operating activities | $26.5 million | $34.4 million |
- Revenue increased 94%, reflecting subscriber growth and a full year of contributions from Hims & Hers UK (HHL) and Apostrophe, both acquired in 2021. Year-end subscribers rose 88% to approximately 1.04 million; monthly online revenue per average subscriber was $53, up 4%.
- Gross margin improved to 78%, primarily due to greater fulfillment through affiliated pharmacies at lower costs. Marketing expense rose 101% to $272.6 million, including $230.4 million in customer acquisition costs.
- The company reported a fourth-quarter net loss of $10.9 million and positive Adjusted EBITDA of $3.9 million. The filing text does not provide a clear fourth-quarter revenue value.
- At year-end, cash and cash equivalents were $46.8 million and short-term investments were $132.9 million, for combined cash and short-term investments of $179.6 million. Current assets were $216.6 million and current liabilities $47.9 million. The balance sheet shows no borrowing debt; prior borrowing arrangements had been paid in full.
- Total assets were $366.3 million, total liabilities $54.6 million, and accumulated deficit $344.6 million. The company used $26.5 million of operating cash; investing activities provided $34.7 million, primarily from net investment cash inflows, while financing activities used $33.1 million, largely for acquisition earn-out payments.
Material changes and unusual items
- Net loss narrowed by $42.0 million year over year. Operating loss improved by $46.3 million, while revenue nearly doubled; marketing and other operating costs also increased substantially.
- General and administrative expense fell 14% to $98.2 million, chiefly because 2021 included merger-related stock compensation, transaction bonuses, and acquisition fees.
- The company paid $42.8 million related to the Apostrophe acquisition earn-out in 2022; no further payments are due under that agreement. Separately, $2.975 million of year-end earn-out liability related to HHL remained.
- The company recognized $1.1 million of long-lived asset impairment charges in 2022, including $0.7 million of intangible asset impairment. The auditor identified assessment of impairment indicators for certain trade names as a critical audit matter.
- Operating expense categories were reclassified for greater detail; prior periods were conformed, with no impact on previously reported financial position or results.
Outlook, risks, and contingencies
- Management expects continued investment in marketing, fulfillment capacity, affiliated pharmacies, technology, customer experience, and new categories. It expects operating losses to continue for at least the next 12 months, but believes existing cash and investments can fund operations for at least one year after the financial statements’ issuance. No numerical revenue or earnings guidance is provided.
- Key risks include evolving telehealth, pharmacy, compounding-drug and corporate-practice-of-medicine rules; privacy and cybersecurity exposure; dependence on provider and pharmacy networks; customer retention and acquisition costs; competition; and the possibility that demand for telehealth or subscription products changes.
- The company relies heavily on subscription-based prescription sales and uses asynchronous telehealth for most consultations in jurisdictions that permit it. Regulatory changes could require operational changes or restrict offerings.
- Management reported ordinary-course legal matters but was not aware of proceedings reasonably likely to have a material adverse impact. Contractual obligations and commitments totaled $10.1 million at year-end, including $3.1 million payable within 12 months.
- The company reported effective disclosure controls and internal control over financial reporting; the auditor issued unqualified opinions on the financial statements and internal controls.
- Class V shares carry 175 votes per share. The CEO and affiliates held approximately 90% of voting power, concentrating control and limiting other shareholders’ influence.
Important facts for investors to verify
- Whether subscriber growth and the 78% gross margin can persist as marketing spending and fulfillment volume increase.
- Retention, acquisition cost, and revenue contribution by category, including the acquired Apostrophe and U.K. businesses.
- Cash burn, investment maturities, and the timing and cost of planned pharmacy and facility expansion.
- Regulatory developments affecting asynchronous telehealth, compounded products, pharmacy operations, and sensitive health-data privacy.
- The potential dilution from stock-based compensation and equity plans, and the implications of the dual-class voting structure.