Hims & Hers Health, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This filing reports annual results; standalone fourth-quarter financial figures are not provided in the supplied text.
Business context
Hims & Hers operates a direct-to-consumer telehealth and health-and-wellness platform, offering consultations, prescription and non-prescription products, and subscriptions. Most revenue is online and subscription-based. The company completed its merger with Oaktree Acquisition Corp. in January 2021, acquired Honest Health in June and Apostrophe in July, and expanded its affiliated pharmacy operations.
Key financial results
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $271.9 million | $148.8 million | +83% |
| Online revenue | $259.2 million | $140.7 million | +84% |
| Wholesale revenue | $12.7 million | $8.0 million | +58% |
| Gross profit / margin | $204.5 million / 75% | $109.5 million / 74% | Margin +1 percentage point |
| Operating loss | $(115.0) million | $(15.1) million | Loss widened |
| Net loss | $(107.7) million | $(18.1) million | Loss widened |
| Adjusted EBITDA | $(30.1) million | $(8.1) million | Loss widened |
| Cash used in operating activities | $(34.4) million | $(2.5) million | Cash use increased |
Growth reflected higher subscriptions, order volume and average order value, as well as acquisitions. Subscriptions rose 95% to approximately 609,000 at year-end; net orders increased 54% to 3.5 million; and average order value rose 19% to $74. Marketing expense increased 130% to $135.9 million, while SG&A increased 180% to $183.6 million. FY2021 stock-based compensation was $67.2 million, including significant merger-related and other catch-up expenses.
Liquidity, cash flow and debt
- Year-end cash and cash equivalents were $71.8 million and short-term investments were $175.5 million, totaling $247.3 million, versus $100.2 million a year earlier.
- Current assets were $269.9 million and current liabilities were $79.2 million at year-end.
- There were no outstanding borrowings at December 31, 2021; prior borrowing arrangements had been repaid.
- Investing activities used $156.3 million, including $46.5 million for acquisitions, net of cash acquired, and $104.8 million of net investment purchases.
- Financing activities provided $235.0 million, principally from merger proceeds and a $75.0 million PIPE investment.
- Contractual obligations and commitments totaled $53.6 million, with $46.2 million payable within 12 months.
Outlook, commentary and notable items
- Management expected operating losses to continue for at least the next 12 months as it invested in marketing, products, technology, providers, and pharmacy and fulfillment capabilities. It stated that available resources were sufficient for at least one year from the financial statements’ issuance.
- The company intended to expand categories and geographies and planned to begin accepting insurance reimbursement as early as 2022, which management said would bring additional compliance requirements and costs. No quantified revenue or earnings guidance is provided.
- Apostrophe contributed approximately $11 million of revenue from acquisition through year-end. Its accounting purchase price was $131.6 million, including cash, stock, and contingent consideration. The auditor identified valuation of Apostrophe’s acquired trade name as a critical audit matter.
- Management attributed much of the sharp increase in SG&A to stock compensation and public-company, acquisition, and growth costs. Net loss also reflects the company’s continuing investment and operating expenses; Adjusted EBITDA is a non-GAAP measure and should be considered alongside GAAP results.
- The company had previously restated financial statements related to SPAC warrant accounting and disclosed a material weakness in internal controls. Management said the weakness was remediated by year-end 2021; management and the auditor reported effective internal control at that date. The auditor’s financial-statement opinion was unqualified.
- Principal risks include evolving telehealth, pharmacy and healthcare regulation; the legal structure of affiliated medical groups; privacy and cybersecurity; customer acquisition and retention costs; competition; supply-chain and pharmacy reliance; and continued losses. Management reported no legal proceedings it believed would individually or collectively have a material adverse effect.
Important facts for investors to verify
- Whether subscription growth, retention, and average order value can sustain revenue growth as marketing spending rises.
- How much of the FY2021 loss increase and future expense reflects recurring operations versus merger-related, stock-based compensation, and acquisition items.
- Whether acquisitions—particularly Apostrophe—meet performance expectations and how earn-out payments and acquired intangible assets evolve.
- Cash burn, investment liquidity, near-term contractual obligations, and management’s stated one-year liquidity outlook.
- Progress and costs associated with insurance reimbursement, pharmacy expansion, regulatory compliance, and integration of acquired businesses.
- Ongoing internal-control integration for Apostrophe and any subsequent disclosures about accounting, cybersecurity, regulatory, or legal matters.