Business Wire | Mar 18, 2021 04:05PM EDT

Hims & Hers Health, Inc. Reports Fourth Quarter and Full Year 2020 Financial Results

Mar. 18, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Mar. 18, 2021--Hims & Hers Health, Inc. ("Hims & Hers", NYSE: HIMS), a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals, today reported financial results for the fourth quarter and full year ending December 31, 2020.

"We closed out this important year for Hims & Hers on a high note, meeting or exceeding the expectations for 2020 performance in our roadshow this past fall, including 80% revenue growth year-over-year and improved gross margins," said Andrew Dudum, CEO and co-founder of Hims & Hers. "We also made smart investments that set us up well to drive future growth in 2021 as we work to create the new front door to the healthcare system."

Mr. Dudum continued, "During the fourth quarter, with the 2020 election and a particularly unique holiday season as the backdrop, we saw advertising rates spike, so we took deliberate and careful steps to manage our expenses in the fourth quarter, which led to moderate quarter-over-quarter sales growth while still exceeding our full-year 2020 revenue plan. These dynamics have normalized in the first quarter and we are seeing improved opportunities to invest in growth. We've started 2021 off strong and are raising our full year forecast accordingly. This is an organization built on solid fundamentals and favorable business characteristics and I'm incredibly confident in our ability to deliver on our vision of helping more people with a wider range of conditions access great, affordable care."

As previously announced, on January 20, 2021, Hims, Inc. and Oaktree Acquisition Corp. ("OAC") completed their merger (the "Merger"). Immediately following the Merger, OAC changed its name to Hims & Hers Health, Inc. and its Class A common stock and warrants were listed on the NYSE under the new trading symbols of "HIMS" and "HIMS WS," respectively. As of January 31, 2021, Hims & Hers had approximately $340 million of cash and cash equivalents and short-term investments on the balance sheet and no debt outstanding.

Financial Highlights for Q1 through Q4 2020

Key Business Metrics

(thousands, except AOV)

Three Months Ended

December September June 30, March 31, 31, 30, 2020 2020 2020 2020

AOV $ 69 $ 67 $ 58 $ 52

Net Orders 579 582 572 546

Revenue

($ thousands, unaudited)

Three Months Ended

December September June 30, March 31, 31, 30, 2020 2020 2020 2020



Online Revenue $ 40,091 $ 38,829 $ 33,284 $ 28,524

Wholesale Revenue 1,375 2,495 2,620 1,539

Total revenue $ 41,466 $ 41,324 $ 35,904 $ 30,063

Total revenue year-over-year 67 % 91 % 76 % 91 %growth

Quarterly Income Statement

($ thousands, unaudited)

Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Revenue

$

41,466

$

41,324

$

35,904

$

30,063

Cost of revenue

9,574

10,047

10,242

9,444

Gross profit

31,892

31,277

25,662

20,619

Gross margin %

77

%

76

%

71

%

69

%

Operating expenses:

Marketing

19,314

15,102

11,800

12,773

Selling, general, and administrative

17,204

19,496

14,841

14,064

Total operating expenses

36,518

34,598

26,641

26,837

Loss from operations

(4,626

)

(3,321

)

(979

)

(6,218

)

Other income (expense):

Interest expense

-

-

-

(10

)

Other (expense) income, net

(579

)

(2,519

)

35

230

Loss before provision for income taxes

(5,205

)

(5,840

)

(944

)

(5,998

)

Provision for income taxes

(24

)

(31

)

(37

)

(35

)

Net loss

$

(5,229

)

$

(5,871

)

$

(981

)

$

(6,033

)

Quarterly Income Statement

($ thousands, unaudited)

Three Months Ended

December September June 30, March 31, 31, 30, 2020 2020 2020 2020



Revenue $ 41,466 $ 41,324 $ 35,904 $ 30,063

Cost of revenue 9,574 10,047 10,242 9,444

Gross profit 31,892 31,277 25,662 20,619

Gross margin % 77 % 76 % 71 % 69 %



Operating expenses:

Marketing 19,314 15,102 11,800 12,773

Selling, general, and 17,204 19,496 14,841 14,064 administrative

Total operating expenses 36,518 34,598 26,641 26,837

Loss from operations (4,626 ) (3,321 ) (979 ) (6,218 )



Other income (expense):

Interest expense - - - (10 )

Other (expense) income, net (579 ) (2,519 ) 35 230

Loss before provision for (5,205 ) (5,840 ) (944 ) (5,998 )income taxes

Provision for income taxes (24 ) (31 ) (37 ) (35 )

Net loss $ (5,229 ) $ (5,871 ) $ (981 ) $ (6,033 )

Net Loss to Adjusted EBITDA Reconciliation

($ thousands, unaudited)

Three Months Ended

December 31, 2020

September 30, 2020

June 30, 2020

March 31, 2020

Net loss

$

(5,229

)

$

(5,871

)

$

(981

)

$

(6,033

)

Depreciation and amortization

365

300

212

180

Provision for income taxes

24

31

37

35

Interest income

(50

)

(48

)

(108

)

(242

)

Interest expense

-

-

-

10

Amortization of debt issuance costs

71

84

83

84

Stock based compensation

1,088

1,414

1,925

1,404

Change in fair value of warrant liability624

2,527

21

(71

)

Adjusted EBITDA

$

(3,107

)

$

(1,563

)

$

1,189

$

(4,633

)

* Revenue was $41.5 million for the fourth quarter 2020 compared to $24.8 million for the fourth quarter 2019, an increase of 67% year-over-year. Revenue for the full year 2020 was $148.8 million compared to $82.6 million for the full year 2019, an increase of 80% year-over-year. * Net loss was $(5.2) million for the fourth quarter 2020 compared to $(12.4) million for the fourth quarter 2019. Net loss was $(18.1) million for the full year 2020 compared to $(72.1) million for the full year 2019. * Gross margin was 77% for the fourth quarter 2020 compared to 61% for the fourth quarter 2019. Gross margin was 74% for the full year 2020 compared to 54% for the full year 2019. * Adjusted EBITDA was $(3.1) million for the fourth quarter 2020 compared to $(11.9) million for the fourth quarter 2019. Adjusted EBITDA for the full year 2020 was $(8.1) million compared to $(66.1) million for the full year 2019.

A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net loss, its most comparable financial measure under generally accepted accounting principles in the United States ("U.S. GAAP"), has been provided in this press release in the accompanying tables. Additional information about Adjusted EBITDA is also included below under the heading "Non-GAAP Financial Measures".

Financial Outlook

Hims & Hers provides guidance based on current market conditions and expectations for revenue and Adjusted EBITDA, which is a non-GAAP financial measure.

For the first-quarter 2021, we expect:

* Revenue to be in the range of $48 million to $50 million. * Adjusted EBITDA to be in the range of $(9.5) million to $(11.5) million.

For the full-year 2021, we expect:

* Revenue to be in the range of $195 million to $205 million. * Adjusted EBITDA to be in the range of $(35) million to $(45) million.

The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to the "Cautionary Note Regarding Forward-Looking Statements" safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

We have not reconciled forward-looking Adjusted EBITDA to its most directly comparable U.S. GAAP measure, net loss, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations, including market-related assumptions that are not within our control, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net loss. See "Non-GAAP Financial Measures" for additional important information regarding Adjusted EBITDA.

Conference Call

Hims & Hers will host a conference call to review the fourth quarter and full year 2020 results today, March 18, 2021, at 2:00 p.m. PT. The conference call can be accessed by dialing (833) 900-2256 for U.S. participants and (236) 714-2727 for international participants, and referencing conference ID #3380049. A live audio webcast will be available online at https://investors.forhims.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call at the same link.

About Hims & Hers Health, Inc.

Hims & Hers is a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals, enabling them to access high-quality medical care for numerous conditions related to primary care, mental health, sexual health, dermatology, and more. Launched in November 2017, the company also offers thoughtfully created and curated health and wellness products. With products and services available across all 50 states and Washington, D.C., Hims & Hers is able to provide access to quality, convenient and affordable care for all Americans. Hims & Hers was founded by CEO Andrew Dudum, Hilary Coles, Jack Abraham and Joe Spector at venture studio Atomic in San Francisco, California. For more information about Hims & Hers, please visit forhims.com and forhers.com.

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should," or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our financial outlook and guidance, financial and business performance, the underlying assumptions, and statements about events and trends including events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs, market acceptance and success of our business model, our ability to expand the scope of our offerings, and our ability to comply with the extensive, complex and evolving regulatory requirements applicable to the healthcare industry. These statements are based on management's current expectations, but actual results may differ materially due to various factors.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the "Risk Factors" section of our annual report on Form 10-K for the year ended December 31, 2020 that we will file with the Securities and Exchange Commission (the "Commission").

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in reports we have filed or will file with the Commission, including our annual report on Form 10-K for the year ended December 31, 2020. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in such reports, those results or developments may not be indicative of results or developments in subsequent periods.

Key Business Metrics

Average Order Value ("AOV") is defined as Online Revenue divided by Net Orders (each as defined below).

"Net Orders" are defined as the number of online customer orders minus transactions related to refunds, credits, chargebacks, and other negative adjustments. Net Orders represent transactions made on our platform during a defined period of time and exclude revenue recognition adjustments recorded pursuant to U.S. GAAP.

"Online Revenue" represents the sales of products and services on our platform, net of refunds, credits, chargebacks and includes revenue recognition adjustments recorded pursuant to U.S. GAAP, primarily relating to deferred revenue and returns reserve.

"Wholesale Revenue" represents non-prescription product sales to retailers through wholesale purchasing agreements.

Net Loss to Adjusted EBITDA Reconciliation

($ thousands, unaudited)

Three Months Ended

December September June 30, March 31, 31, 30, 2020 2020 2020 2020



Net loss $ (5,229 ) $ (5,871 ) $ (981 ) $ (6,033 )

Depreciation and amortization 365 300 212 180

Provision for income taxes 24 31 37 35

Interest income (50 ) (48 ) (108 ) (242 )

Interest expense - - - 10

Amortization of debt issuance 71 84 83 84 costs

Stock based compensation 1,088 1,414 1,925 1,404

Change in fair value of warrant 624 2,527 21 (71 )liabilityAdjusted EBITDA $ (3,107 ) $ (1,563 ) $ 1,189 $ (4,633 )

* Revenue was $41.5 million for the fourth quarter 2020 compared to $24.8 million for the fourth quarter 2019, an increase of 67% year-over-year. Revenue for the full year 2020 was $148.8 million compared to $82.6 million for the full year 2019, an increase of 80% year-over-year. * Net loss was $(5.2) million for the fourth quarter 2020 compared to $(12.4) million for the fourth quarter 2019. Net loss was $(18.1) million for the full year 2020 compared to $(72.1) million for the full year 2019. * Gross margin was 77% for the fourth quarter 2020 compared to 61% for the fourth quarter 2019. Gross margin was 74% for the full year 2020 compared to 54% for the full year 2019. * Adjusted EBITDA was $(3.1) million for the fourth quarter 2020 compared to $(11.9) million for the fourth quarter 2019. Adjusted EBITDA for the full year 2020 was $(8.1) million compared to $(66.1) million for the full year 2019.

A reconciliation of Adjusted EBITDA, a non-GAAP measure, to net loss, its most comparable financial measure under generally accepted accounting principles in the United States ("U.S. GAAP"), has been provided in this press release in the accompanying tables. Additional information about Adjusted EBITDA is also included below under the heading "Non-GAAP Financial Measures".

Financial Outlook

Hims & Hers provides guidance based on current market conditions and expectations for revenue and Adjusted EBITDA, which is a non-GAAP financial measure.

For the first-quarter 2021, we expect:

* Revenue to be in the range of $48 million to $50 million. * Adjusted EBITDA to be in the range of $(9.5) million to $(11.5) million.

For the full-year 2021, we expect:

* Revenue to be in the range of $195 million to $205 million. * Adjusted EBITDA to be in the range of $(35) million to $(45) million.

The guidance provided above constitutes forward-looking statements and actual results may differ materially. Refer to the "Cautionary Note Regarding Forward-Looking Statements" safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

We have not reconciled forward-looking Adjusted EBITDA to its most directly comparable U.S. GAAP measure, net loss, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations, including market-related assumptions that are not within our control, or others that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net loss. See "Non-GAAP Financial Measures" for additional important information regarding Adjusted EBITDA.

Conference Call

Hims & Hers will host a conference call to review the fourth quarter and full year 2020 results today, March 18, 2021, at 2:00 p.m. PT. The conference call can be accessed by dialing (833) 900-2256 for U.S. participants and (236) 714-2727 for international participants, and referencing conference ID #3380049. A live audio webcast will be available online at https://investors.forhims.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call at the same link.

About Hims & Hers Health, Inc.

Hims & Hers is a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals, enabling them to access high-quality medical care for numerous conditions related to primary care, mental health, sexual health, dermatology, and more. Launched in November 2017, the company also offers thoughtfully created and curated health and wellness products. With products and services available across all 50 states and Washington, D.C., Hims & Hers is able to provide access to quality, convenient and affordable care for all Americans. Hims & Hers was founded by CEO Andrew Dudum, Hilary Coles, Jack Abraham and Joe Spector at venture studio Atomic in San Francisco, California. For more information about Hims & Hers, please visit forhims.com and forhers.com.

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will," "potential," "projects," "predicts," "continue," or "should," or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our financial outlook and guidance, financial and business performance, the underlying assumptions, and statements about events and trends including events and trends that we believe may affect our financial condition, results of operations, short- and long-term business operations and objectives, and financial needs, market acceptance and success of our business model, our ability to expand the scope of our offerings, and our ability to comply with the extensive, complex and evolving regulatory requirements applicable to the healthcare industry. These statements are based on management's current expectations, but actual results may differ materially due to various factors.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the "Risk Factors" section of our annual report on Form 10-K for the year ended December 31, 2020 that we will file with the Securities and Exchange Commission (the "Commission").

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in reports we have filed or will file with the Commission, including our annual report on Form 10-K for the year ended December 31, 2020. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in such reports, those results or developments may not be indicative of results or developments in subsequent periods.

Key Business Metrics

Average Order Value ("AOV") is defined as Online Revenue divided by Net Orders (each as defined below).

"Net Orders" are defined as the number of online customer orders minus transactions related to refunds, credits, chargebacks, and other negative adjustments. Net Orders represent transactions made on our platform during a defined period of time and exclude revenue recognition adjustments recorded pursuant to U.S. GAAP.

"Online Revenue" represents the sales of products and services on our platform, net of refunds, credits, chargebacks and includes revenue recognition adjustments recorded pursuant to U.S. GAAP, primarily relating to deferred revenue and returns reserve.

"Wholesale Revenue" represents non-prescription product sales to retailers through wholesale purchasing agreements.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data, unaudited)

December 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 27,344 $ 22,647

Short-term investments 72,864 37,721

Inventory 3,543 4,217

Prepaid expenses and other current assets 5,404 5,022

Deferred transaction costs 3,929 -

Total current assets 113,084 69,607

Restricted cash, noncurrent 1,006 150

Other long-term assets 4,607 2,313

Total assets $ 118,697 $ 72,070



Liabilities, mezzanine equity, and stockholders' equity

Current liabilities:

Accounts payable $ 8,066 $ 7,231

Accrued liabilities 4,984 2,026

Deferred revenue 1,272 753

Term loan, current - 1,515

Warrant liabilities 906 9,097

Total current liabilities 15,228 20,622

Deferred rent, noncurrent 381 -

Total liabilities 15,609 20,622



Commitments and contingencies



Mezzanine equity:

Redeemable convertible preferred stock - par value$0.000001; 211,924,602 and 192,870,448 sharesauthorized and 206,031,290 and 186,573,651 sharesissued and outstanding as of December 31, 2020 and 249,962 186,741 2019, respectively; liquidation preference of$268,452 and $206,138 as of December 31, 2020 and2019, respectively

Redeemable Class A common stock - par value$0.000001; nil and 1,627,132 shares issued and - 4,500 outstanding as of December 31, 2020 and 2019,respectively

Total mezzanine equity 249,962 191,241



Stockholders' deficit:

Common stock - Class A shares, par value $0.000001;368,000,000 and 333,000,000 shares authorized and101,606,862 and 98,563,353 shares issued andoutstanding as of December 31, 2020 and 2019, - - respectively; Class F shares, par value $0.000001;15,323,740 shares authorized, issued, and outstandingas of December 31, 2020 and 2019

Additional paid-in capital 24,429 13,383

Accumulated other comprehensive (loss) income (11 ) 2

Accumulated deficit (171,292 ) (153,178 )

Total stockholders' deficit (146,874 ) (139,793 )

Total liabilities, mezzanine equity, and $ 118,697 $ 72,070 stockholders' deficit

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share data, unaudited)

Twelve Months Ended December 31,

Three Months Ended December 31,

2020

2019

2020

2019

Revenue

$

148,757

$

82,558

$

41,466

$

24,769

Cost of revenue

39,307

37,953

9,574

9,638

Gross profit

109,450

44,605

31,892

15,131

Gross margin %

74

%

54

%

77

%

61

%

Operating expenses:

Marketing

58,989

63,156

19,314

13,173

Selling, general, and administrative

65,605

55,863

17,204

15,492

Total operating expenses

124,594

119,019

36,518

28,665

Loss from operations

(15,144

)

(74,414

)

(4,626

)

(13,534

)

Other income (expense):

Interest expense

(10

)

(369

)

-

(33

)

Other (expense) income, net

(2,833

)

2,809

(579

)

1,234

Loss before provision for income taxes

(17,987

)

(71,974

)

(5,205

)

(12,333

)

Provision for income taxes

(127

)

(90

)

(24

)

(23

)

Net loss

(18,114

)

(72,064

)

(5,229

)

(12,356

)

Other comprehensive (loss) income

(13

)

4

(1

)

5

Total comprehensive loss

$

(18,127

)

$

(72,060

)

$

(5,230

)

$

(12,351

)

Net loss per share attributable to common stockholders:

Basic and diluted

$

(0.23

)

$

(0.94

)

$

(0.07

)

$

(0.16

)

Weighted average shares outstanding:

Basic and diluted

78,047,120

76,545,970

79,311,940

76,747,377

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share data, unaudited)

Twelve Months Ended Three Months Ended December 31, December 31,

2020 2019 2020 2019



Revenue $ 148,757 $ 82,558 $ 41,466 $ 24,769

Cost of revenue 39,307 37,953 9,574 9,638

Gross profit 109,450 44,605 31,892 15,131

Gross margin % 74 % 54 % 77 % 61 %



Operating expenses:

Marketing 58,989 63,156 19,314 13,173

Selling, general,and 65,605 55,863 17,204 15,492 administrative

Total operating 124,594 119,019 36,518 28,665 expenses

Loss from (15,144 ) (74,414 ) (4,626 ) (13,534 )operations



Other income (expense):

Interest expense (10 ) (369 ) - (33 )

Other (expense) (2,833 ) 2,809 (579 ) 1,234 income, net

Loss beforeprovision for (17,987 ) (71,974 ) (5,205 ) (12,333 )income taxes

Provision for (127 ) (90 ) (24 ) (23 )income taxes

Net loss (18,114 ) (72,064 ) (5,229 ) (12,356 )

Othercomprehensive (13 ) 4 (1 ) 5 (loss) income

Totalcomprehensive $ (18,127 ) $ (72,060 ) $ (5,230 ) $ (12,351 )loss



Net loss pershareattributable to commonstockholders:

Basic and diluted $ (0.23 ) $ (0.94 ) $ (0.07 ) $ (0.16 )

Weighted averageshares outstanding:

Basic and diluted 78,047,120 76,545,970 79,311,940 76,747,377

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Year Ended December 31,

2020

2019

Operating activities

Net loss

$

(18,114

)

$

(72,064

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

1,057

260

Stock-based compensation

5,831

8,028

Change in fair value of warrant liability

3,101

(951

)

Loss on lease termination

754

-

Amortization of debt issuance costs

322

70

Noncash other

384

(358

)

Changes in operating assets and liabilities:

Inventory

674

(522

)

Prepaid expenses and other current assets

(645

)

(2,436

)

Other long-term assets

8

(755

)

Accounts payable

826

(6,075

)

Accrued liabilities

2,423

(276

)

Deferred revenue

519

212

Deferred rent

381

-

Net cash used in operating activities

(2,479

)

(74,867

)

Investing activities

Purchases of investments

(95,008

)

(42,012

)

Maturities of investments

47,990

4,500

Proceeds from sale of investments

11,550

-

Investment in website development, internal-use software, and intangible assets

(2,496

)

(1,479

)

Purchases of property, equipment, and intangible assets

(1,737

)

(308

)

Net cash used in investing activities

(39,701

)

(39,299

)

Financing activities

Proceeds from issuance of redeemable convertible preferred stock

52,034

102,793

Payments for issuance costs of redeemable convertible preferred stock

(134

)

(227

)

Proceeds from exercise of Series C preferred stock warrants

29

-

Proceeds from exercise of Class A common stock warrants

561

-

Proceeds from exercise of vested and unvested stock options, net of repurchases of unvested shares

123

44

Borrowings of principal on term loan

-

2,136

Repayments of principal on term loan

(1,515

)

(9,051

)

Payments for debt issuance costs

-

(377

)

Payments for transaction costs

(3,356

)

-

Net cash provided by financing activities

47,742

95,318

Foreign currency effect on cash and cash equivalents

(9

)

(5

)

Increase (decrease) in cash, cash equivalents, and restricted cash

5,553

(18,853

)

Cash, cash equivalents, and restricted cash at beginning of year

22,797

41,650

Cash, cash equivalents, and restricted cash at end of year

$

28,350

$

22,797

Supplemental disclosures of cash flow information

Cash paid for taxes

$

221

$

139

Cash paid for interest

$

10

$

361

Noncash investing and financing activities

Exercise of preferred stock warrants

$

11,292

$

-

Expiration of Class A common stock redemption right

$

4,500

$

-

Redeemable Class A common stock reclassification

$

-

$

4,500

Deferred transaction costs payable

$

573

$

-

Warrants issued for debt issuance costs

$

-

$

133

Vesting of early exercised stock options

$

31

$

12

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. GAAP, we present Adjusted EBITDA, a non-GAAP financial measure. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, when taken together with the corresponding U.S. GAAP financial measure, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA is helpful to our investors as it is a metric used by management in assessing the health of our business and our operating performance.

However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review net loss and the reconciliation of Adjusted EBITDA to net loss, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. "Adjusted EBITDA" is defined as net loss before depreciation and amortization, provision for income taxes, interest income, interest expense, amortization of debt issuance costs, stock-based compensation, and change in fair value of warrant liability.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

Year Ended December 31,

2020 2019

Operating activities

Net loss $ (18,114 ) $ (72,064 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 1,057 260

Stock-based compensation 5,831 8,028

Change in fair value of warrant liability 3,101 (951 )

Loss on lease termination 754 -

Amortization of debt issuance costs 322 70

Noncash other 384 (358 )

Changes in operating assets and liabilities:

Inventory 674 (522 )

Prepaid expenses and other current assets (645 ) (2,436 )

Other long-term assets 8 (755 )

Accounts payable 826 (6,075 )

Accrued liabilities 2,423 (276 )

Deferred revenue 519 212

Deferred rent 381 -

Net cash used in operating activities (2,479 ) (74,867 )



Investing activities

Purchases of investments (95,008 ) (42,012 )

Maturities of investments 47,990 4,500

Proceeds from sale of investments 11,550 -

Investment in website development, internal-use (2,496 ) (1,479 )software, and intangible assets

Purchases of property, equipment, and intangible assets (1,737 ) (308 )

Net cash used in investing activities (39,701 ) (39,299 )



Financing activities

Proceeds from issuance of redeemable convertible 52,034 102,793 preferred stock

Payments for issuance costs of redeemable convertible (134 ) (227 )preferred stock

Proceeds from exercise of Series C preferred stock 29 - warrants

Proceeds from exercise of Class A common stock warrants 561 -

Proceeds from exercise of vested and unvested stock 123 44 options, net of repurchases of unvested shares

Borrowings of principal on term loan - 2,136

Repayments of principal on term loan (1,515 ) (9,051 )

Payments for debt issuance costs - (377 )

Payments for transaction costs (3,356 ) -

Net cash provided by financing activities 47,742 95,318



Foreign currency effect on cash and cash equivalents (9 ) (5 )



Increase (decrease) in cash, cash equivalents, and 5,553 (18,853 )restricted cash

Cash, cash equivalents, and restricted cash at 22,797 41,650 beginning of year

Cash, cash equivalents, and restricted cash at end of $ 28,350 $ 22,797 year



Supplemental disclosures of cash flow information

Cash paid for taxes $ 221 $ 139

Cash paid for interest $ 10 $ 361



Noncash investing and financing activities

Exercise of preferred stock warrants $ 11,292 $ -

Expiration of Class A common stock redemption right $ 4,500 $ -

Redeemable Class A common stock reclassification $ - $ 4,500

Deferred transaction costs payable $ 573 $ -

Warrants issued for debt issuance costs $ - $ 133

Vesting of early exercised stock options $ 31 $ 12

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. GAAP, we present Adjusted EBITDA, a non-GAAP financial measure. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, when taken together with the corresponding U.S. GAAP financial measure, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA is helpful to our investors as it is a metric used by management in assessing the health of our business and our operating performance.

However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with U.S. GAAP. Investors are encouraged to review net loss and the reconciliation of Adjusted EBITDA to net loss, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. "Adjusted EBITDA" is defined as net loss before depreciation and amortization, provision for income taxes, interest income, interest expense, amortization of debt issuance costs, stock-based compensation, and change in fair value of warrant liability.

Net Loss to Adjusted EBITDA Reconciliation

($ thousands, unaudited)

Twelve Months Ended Three Months Ended December 31, December 31,

2020 2019 2020 2019



Net loss $ (18,114 ) $ (72,064 ) $ (5,229 ) $ (12,356 )

Depreciation and amortization 1,057 260 365 150

Provision for income taxes 127 90 24 23

Interest income (448 ) (1,901 ) (50 ) (379 )

Interest expense 10 369 - 33

Amortization of debt issuance 322 70 71 42 costs

Stock based compensation 5,831 8,028 1,088 1,441

Change in fair value of warrant 3,101 (951 ) 624 (870 )liabilityAdjusted EBITDA $ (8,114 ) $ (66,099 ) $ (3,107 ) $ (11,916 )

View source version on businesswire.com: https://www.businesswire.com/news/home/20210318005928/en/

CONTACT: Investor Relations Bob East or Jordan Kohnstam Westwicke, an ICR company HIMS-IR@westwicke.com

CONTACT: Media Relations Press@forhims.com