Consumer telehealth and wellness brand Hims & Hers wrapped up its merger with special purpose acquisition company Oaktree Acquisition on January 19 and began trading on the New York Stock Exchange.
WHO: Launched in late 2017 by Andrew Dudum, Hims is a men’s wellness direct-to-consumer brand dedicated to millennial men. One year later, the company launched Hers, expanding into female wellness. Hims & Hers currently offers sexual dysfunction, hair loss, dermatology, and anxiety and depression services. It plans to expand to sleep, fertility, diabetes, and cholesterol. The model is completely cash-pay with members paying around $20 a month for access to unlimited online consultations and a supply of generic medications. While the company doesn’t contract with insurance at the moment, that could change in the future.
Oaktree Acquisitions Corp. is a special purpose acquisition company (SPAC), which is an investment vehicle established for the purpose of going public as a shell company with no business operations but the intention of reverse acquiring or merging with another company. The merged company uses the proceeds from the SPAC’s initial public offering.
WHY: The deal has brought the telehealth and wellness business roughly $280 million that it will use for growth and expansion into new product categories.
IN THEIR OWN WORDS: “We drove tremendous progress in 2020 toward our mission of becoming the front door to the healthcare system,” Andrew Dudum, CEO and co-founder of Hims & Hers, said in a statement. “Today’s milestone brings us even closer to making modern, affordable care accessible to more Americans. By providing a seamless patient experience combined with proprietary technology, we intend to transform many of healthcare’s most important categories, including primary care and mental health.”
Hims & Hers markets itself as a one-stop-shop for consumers, allowing them to bypass the traditional in-person care delivery pathway. It can be more expensive than other telehealth offerings but is still generally cheaper than the unbundled price of a doctor’s visit and full-price prescription, SVB Leerink analyst Stephanie Davis told Retail Dive.
- Hims & Hers wrapped up the merger with SPAC Oaktree Acquisition on January 19 and began trading on the New York Stock Exchange under the symbol HIMS.
- The deal values the business at $1.6 billion, equal to 8.9 times estimated 2021 revenue, and 12.2 times estimated 2021 gross profit.
- The deal provides Hims with $279.5 million, $205 million of which comes as cash from Oaktree Acquisition Corp., and $75 million from the concurrent private placement of common stock priced at $10 per share.
- The business plans to reinvest the proceeds of the deal in driving geographic growth and new product lines.
- Dudum told TechCrunch its customer acquisition costs have come down from $200 at launch to roughly $100 last year, with the average lifetime value of a patient at close to $300 in the first couple of years.
- Hims & Hers has run more than 2 million telehealth visits and seen 100% compounded annual revenue growth, from $27 million in 2018 to $83 million in 2019 and an expected $138 million this year, per internal data.
- According to financial documents filed with the SEC in December, the brand has more than doubled gross margins to 71%, with recurring revenue making up 91% of its top line. However, the company has yet to turn a profit, reporting a $69 million net loss in 2019, and doesn’t expect that to change in the near term as it reinvests in growth.
- Claims nearly 300,000 paying subscribers for its various offerings.
- The company’s management and existing equity holders have also rolled between 90% and 100% of their equity into the combined venture, which will continue to be led by CEO and co-founder Andrew Dudum, along with much of its existing leadership team.
- The San Francisco-based company’s venture investors include McKesson Ventures, Founders Fund, Institutional Venture Partners, Forerunner Ventures, Redpoint Ventures, and Thrive Capital.
Photo: via Hims & Hers