Hims & Hers Health, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; financial statements are unaudited. The company operates a consumer health and wellness platform offering online consultations and prescription and non-prescription products, primarily through subscriptions, alongside wholesale sales.
Key financial results
| Metric | Q2 2022 | Q2 2021 | First half 2022 | First half 2021 |
|---|---|---|---|---|
| Revenue | $113.6m | $60.7m | $214.9m | $113.0m |
| Gross profit / margin | $87.2m / 77% | $47.3m / 78% | $161.9m / 75% | $87.5m / 77% |
| Operating expenses | $107.4m | $64.7m | $199.0m | $153.3m |
| Operating loss | $(20.2)m | $(17.4)m | $(37.1)m | $(65.8)m |
| Net loss | $(19.7)m | $(9.2)m | $(35.9)m | $(60.6)m |
| Adjusted EBITDA (non-GAAP) | $(7.5)m | $(4.7)m | $(13.6)m | $(13.2)m |
| Operating cash flow | Not provided for the quarter | $(25.8)m | $(15.3)m |
Q2 basic and diluted loss per share was $0.10, versus $0.05 a year earlier; first-half loss per share was $0.18, versus $0.35. No funded borrowings are listed on the balance sheet. Operating lease liabilities totaled $4.8m; total contractual obligations and commitments were $21.8m, including $16.4m due within 12 months.
Liquidity and cash flow
At June 30, cash and cash equivalents were $55.0m and short-term investments were $139.9m, totaling $195.0m in cash and investments. Current assets were $230.5m and current liabilities $55.6m. First-half investing activities provided $31.3m, mainly from net investment maturities and sales; financing activities used $22.2m, largely reflecting acquisition earn-out payments. Cash, cash equivalents, and restricted cash declined $16.8m during the first half to $55.9m.
Changes versus comparable periods
- Q2 revenue rose 87% year over year; online revenue increased 85% and wholesale revenue 140%. First-half revenue grew 90%.
- Subscriptions increased 80% year over year to approximately 817,000; net orders rose 76% and average order value increased 5% to $78.
- Q2 gross margin eased to 77% from 78%; first-half margin fell to 75% from 77%, which management attributed mainly to a higher wholesale revenue mix and acquired businesses.
- Q2 marketing expense rose 116% to $60.5m, including $51.0m of customer acquisition costs, up 131%. Q2 net loss widened, while first-half net loss improved versus 2021, when substantial merger-related stock compensation and bonuses increased expenses.
- Q2 Adjusted EBITDA loss widened; first-half Adjusted EBITDA loss was slightly larger despite improved GAAP net loss, reflecting changes in non-GAAP adjustments.
Outlook, commentary, and risks
Management gave no specific revenue or earnings guidance in the supplied filing text. It expects operating losses to continue for at least the next 12 months as it invests in marketing, fulfillment, pharmacies, products, and customer experience. Management believes available financial resources are sufficient for at least one year after issuance of the statements, but says future capital needs depend on growth, spending, acquisitions, and other factors; additional financing may be required and may not be available on acceptable terms.
Growth reflects higher subscriptions, orders, average order value, new retail partners, and contributions from Apostrophe and HHL. Management expects continued investment and notes that customer acquisition effectiveness, retention, product mix, and operating costs may affect results. Key disclosed risks include extensive and evolving healthcare, pharmacy, telehealth, and privacy regulation; security and data-protection incidents; provider and pharmacy relationships; competition and marketing costs; supply-chain disruption; macroeconomic uncertainty; and the possibility that telehealth demand or customer retention weakens. COVID-19 had not materially adversely affected results to date, but potential future effects remained uncertain.
The company reported no legal proceedings that management believed would individually or collectively have a material adverse effect. Disclosure controls were assessed as effective at the reasonable assurance level as of June 30, 2022.
Investor facts to verify
- Whether subscription growth and customer retention support the elevated marketing and acquisition spending.
- How gross margin develops as wholesale sales and acquired operations contribute more revenue.
- Cash consumption, the timing of the remaining $13.0m Apostrophe earn-out payment, and management’s one-year liquidity assessment.
- Progress toward profitability, including the composition of Adjusted EBITDA adjustments and stock-based compensation.
- Regulatory compliance and execution risks involving affiliated medical groups, pharmacies, prescription fulfillment, and sensitive customer data.