What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-27 · 234 added, 212 removed, 785 unchanged (36% of the section changed)

33 unchanged sentences

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

14 unchanged sentences

We evaluated the Company’s triggering event identification and assessment, including the demand for the certain asset group’s products and services and profitability, by:

• inspecting actual operating results and budgets in comparison with financial projections made by the Company at the time the certain asset group was acquired to identify underperformance

• inspecting actual operating results in comparison with financial projections made by the Company at the time the certain asset group was acquired to identify underperformance

• considering relevant analyst reports

15 unchanged sentences

Goodwill 110,881 110,881

Intangibles, net 21,841 25,890

Property, equipment, and software, net 36,143 11,199

Intangible assets, net 18,574 21,841

Operating lease right-of-use assets 9,588 4,936

42 unchanged sentences

Other income, net 8,957 2,918 445

Total other income (expense), net 2,988 4,247 ( 2,843 )

Total other income, net 7,882 2,988 4,247

Loss before income taxes ( 21,571 ) ( 65,709 ) ( 110,795 )

Benefit (provision) for income taxes 31 3,136 ( 127 )

(Provision) benefit for income taxes ( 1,975 ) 31 3,136

Net loss ( 23,546 ) ( 65,678 ) ( 107,659 )

Other comprehensive loss ( 140 ) ( 126 ) ( 13 )

Other comprehensive income (loss) 153 ( 140 ) ( 126 )

Total comprehensive loss $ ( 23,393 ) $ ( 65,818 ) $ ( 107,785 )

7 unchanged sentences

(In Thousands, Except Share Data)

Redeemable Convertible Preferred Stock Redeemable

Common Stock Common Stock Additional

Redeemable Convertible Preferred Stock Common Stock Additional

Capital Accumulated

4 unchanged sentences

Equity (Deficit)

Shares Amount Shares Amount Shares Amount

Balance as of December 31, 2019 84,514,191 $ 186,741 737,058 $ 4,500 51,588,459 $ 5 $ 13,378 $ 2 $ ( 153,178 ) $ ( 139,793 )

Issuance of Series D redeemable convertible preferred stock, net of issuance costs of $ 0.1 million

7,472,062 51,900 — — — — — — — —

Exercise of Series C redeemable convertible preferred stock warrants 1,341,865 11,321 — — — — — — — —

Exercise of Class A common stock warrants — — — — 1,051,206 — 561 — — 561

Exercise of vested stock options — — — — 167,655 — 123 — — 123

Early exercise of unvested stock options — — — — 17,924 — — — — —

Vesting of early-exercised stock options — — — — — — 31 — — 31

Forfeiture of unvested early-exercised shares — — — — ( 595,196 ) — — — — —

Stock-based compensation — — — — — — 5,831 — — 5,831

Expiration of the Class A common stock redemption right — — ( 737,058 ) ( 4,500 ) 737,058 — 4,500 — — 4,500

Other comprehensive loss — — — — — — — ( 13 ) — ( 13 )

Net loss — — — — — — — — ( 18,114 ) ( 18,114 )

Shares Amount Shares Amount

Balance as of December 31, 2020 93,328,118 $ 249,962 52,967,106 $ 5 $ 24,424 $ ( 11 ) $ ( 171,292 ) $ ( 146,874 )

29 unchanged sentences

Balance as of December 31, 2022 — — 208,429,312 21 656,626 ( 277 ) ( 344,629 ) 311,741

Issuance of common stock upon vesting of RSUs, net of shares withheld for taxes — — 3,472,456 — — — — —

Payments for taxes related to net share settlement of equity awards — — — — ( 14,096 ) — — ( 14,096 )

Exercise of vested stock options — — 1,222,548 — 2,322 — — 2,322

Issuance of common stock under employee stock purchase plan — — 594,885 — 2,298 — — 2,298

Repurchases and retirement of common stock — — ( 237,458 ) — ( 1,999 ) — — ( 1,999 )

Stock-based compensation — — — — 67,156 — — 67,156

Other comprehensive income — — — — — 153 — 153

Net loss — — — — — — ( 23,546 ) ( 23,546 )

Balance as of December 31, 2023 — $ — 213,481,743 $ 21 $ 712,307 $ ( 124 ) $ ( 368,175 ) $ 344,029

See accompanying notes to consolidated financial statements.

6 unchanged sentences

Net loss $ ( 23,546 ) $ ( 65,678 ) $ ( 107,659 )

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

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 9,515 7,474 4,075

2 unchanged sentences

Warrant expense in connection with Merger — — 154

Lease termination expense — — 754

Amortization of debt issuance costs — — 144

Net amortization on securities 146 2,166 325

Net (accretion) amortization on securities ( 5,686 ) 146 2,166

Benefit for deferred taxes ( 13 ) ( 594 ) ( 3,388 )

12 unchanged sentences

Earn-out payable — ( 10,184 ) —

Other long-term liabilities — — 381

Net cash used in operating activities ( 26,531 ) ( 34,412 ) ( 2,479 )

Net cash provided by (used in) operating activities 73,483 ( 26,531 ) ( 34,412 )

Investing activities

6 unchanged sentences

Acquisition of businesses, net of cash acquired — — ( 46,468 )

Net cash provided by (used in) investing activities 34,699 ( 156,268 ) ( 39,701 )

Net cash (used in) provided by investing activities ( 12,106 ) 34,699 ( 156,268 )

Financing activities

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs — — 51,900

Pre-closing stock repurchase — — ( 22,027 )

3 unchanged sentences

Proceeds from repayment of promissory notes associated with vested and unvested shares — — 1,193

Proceeds from exercise of Series C preferred stock warrants — — 29

Proceeds from exercise of Class A common stock warrants, net of redemption payments — — 787

Proceeds from exercise of vested and unvested stock options, net of repurchases and cancelations 2,322 2,246 1,253

Repayments of principal on term loan — — ( 1,515 )

Payments for taxes related to net share settlement of equity awards ( 14,096 ) ( 3,901 ) ( 5,998 )

1 unchanged sentence

Proceeds from employee stock purchase plan 2,298 1,178 —

Repurchases of common stock ( 1,999 ) — —

Net cash (used in) provided by financing activities ( 11,475 ) ( 33,127 ) 235,043

Foreign currency effect on cash and cash equivalents ( 11 ) ( 53 ) ( 73 )

(Decrease) increase in cash, cash equivalents, and restricted cash ( 25,012 ) 44,290 5,553

Increase (decrease) in cash, cash equivalents, and restricted cash 49,891 ( 25,012 ) 44,290

Cash, cash equivalents, and restricted cash at beginning of period 47,628 72,640 28,350

6 unchanged sentences

Cash paid for taxes $ 1,109 $ 636 $ 338

Cash paid for interest — — 10

Non-cash investing and financing activities

Expiration of Class A common stock redemption right — — 4,500

Exercise of convertible preferred stock warrants — — 11,292

Recapitalization of redeemable convertible preferred stock from pre-closing stock repurchase — — 125

3 unchanged sentences

Conversion of Series D preferred stock warrants to Class A common warrants — — 1,160

Purchase of property and equipment included in accounts payable 3,383 — —

Right-of-use asset obtained in exchange for lease liability 6,270 1,206 —

5 unchanged sentences

Hims & Hers Health, Inc.

(the “Company” or “Hims & Hers”), incorporated in Delaware and formerly known as Oaktree Acquisition Corp.

(“OAC”), is a consumer-first platform transforming the way customers fulfill their health and wellness needs.

(the “Company” or “Hims & Hers”), incorporated in Delaware, is a consumer-first platform transforming the way customers fulfill their health and wellness needs.

The Company’s mission is to help the world feel great through the power of better health.

The Hims & Hers platform includes access to a highly-qualified and technologically-capable provider network, a clinically-focused electronic medical record system, digital prescriptions, and cloud pharmacy fulfillment.

The Company’s digital platform enables access to treatments for a broad range of conditions, including those related to sexual health, hair loss, dermatology, mental health, and primary care.

The Hims & Hers platform includes access to a highly-qualified and technologically-capable provider network, a clinically-focused electronic medical records system, digital prescriptions, and cloud-enabled pharmacy fulfillment.

The Company’s digital platform enables access to treatments for a broad range of conditions, including those related to sexual health, hair loss, dermatology, mental health, and weight loss.

Hims & Hers connects patients to licensed healthcare professionals who can prescribe medications when appropriate.

1 unchanged sentence

Through the Hims & Hers mobile applications, consumers can access a range of educational programs, wellness content, community support, and other services that promote lifelong health and wellness.

In addition, the Company also offers access to a range of health and wellness products designed to meet individual needs, which can include curated prescription and non-prescription products.

In addition, the Company offers access to a range of health and wellness products designed to meet individual needs, which can include curated prescription and non-prescription products.

The Company’s products and services are available for purchase directly by customers on the Company’s websites and mobile applications.

Additionally, Hims & Hers products can be found in tens of thousands of top retail locations in the United States.

Additionally, Hims & Hers non-prescription products can be found in tens of thousands of top retail locations in the United States.

On January 20, 2021 (the “Closing Date”), OAC completed the acquisition of Hims, Inc.

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All intercompany transactions and balances have been eliminated in the consolidated financial statements herein.

For the years ended December 31, 2022, 2021, and 2020, the Company had operations primarily in the United States and immaterial operations in the United Kingdom.

Reclassifications

Beginning with the year ended December 31, 2022, the Company voluntarily reclassified certain operating expenses within the consolidated statements of operations and comprehensive loss.

Prior period amounts have been reclassified to conform to this presentation.

These changes have no impact on the Company’s previously reported financial position or results of operations.

These classification changes are related to breaking out the Company’s previous selling, general, and administrative caption into three new captions entitled:

(i) operations and support, (ii) technology and development, and (iii) general and administrative.

The operations and support caption includes costs related to the Company’s supply chain, fulfillment and customer support functions.

The technology and development caption includes costs related to the operation and enhancement of the Company’s digital platform and product development.

The general and administrative caption includes costs relating to the Company’s corporate functions, including personnel costs, professional services, insurance, depreciation and amortization relating to corporate operating activities, and other general corporate costs.

For the years ended December 31, 2023, 2022, and 2021, the Company had operations primarily in the United States, with insignificant operations in the United Kingdom.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The more significant estimates, judgements, and assumptions by management include, among others, valuation of inventory, valuation and recognition of stock-based compensation expense, valuation of contingent consideration in business combinations, purchase price allocation for business combinations, estimates used in the capitalization of website and mobile application development and internal-use software costs, and judgements relating to impairment triggering events for long-lived assets.

GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and accompanying notes.

significant estimates, judgments, and assumptions by management include, among others, valuation of inventory, valuation and recognition of stock-based compensation expense, valuation of contingent consideration in business combinations, purchase price allocation for business combinations, estimates used in the capitalization of website and mobile application development and internal-use software costs, and judgments relating to impairment triggering events for long-lived assets.

Management believes that the estimates, judgments, and assumptions upon which it relies are reasonable based upon information available to it at the time that these estimates, judgments, and assumptions were made.

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banks and are insured to the extent defined by the Federal Deposit Insurance Corporation.

The prescription products ordered on the Company’s e-commerce online platform are primarily fulfilled by five affiliated and partner pharmacies.

The prescription products ordered on the Company’s e-commerce online platform are primarily fulfilled by the Affiliated and Partner Pharmacies (as defined below).

If any of the pharmacies were to stop fulfilling orders, it could significantly slow prescription product sales until fulfillment volume is redistributed to other operating pharmacies.

The Company maintains agreements with these pharmacies and is investing in expanding affiliated pharmacy fulfillment capabilities to mitigate any such risk .

As of December 31, 2022, two wholesale customers individually represented more than 10% of accounts receivable.

As of December 31, 2021, three wholesale customers represented more than 10% of accounts receivable.

The Company maintains agreements with these pharmacies and is continuing to invest in expanding affiliated pharmacy fulfillment capabilities to mitigate any such risk .

As of December 31, 2023, four wholesale customers individually represented more than 10% of accounts receivable.

As of December 31, 2022, two wholesale customers represented more than 10% of accounts receivable.

For the years ended December 31, 2023, 2022, and 2021, no single customer represented more than 10% of revenue.

3 unchanged sentences

Adjustments resulting from translating foreign functional currency financial statements into U.S.

dollars are presented as foreign currency translation adjustments, a component of other comprehensive loss on the consolidated statements of operations and comprehensive loss.

dollars are presented as foreign currency translation adjustments, a component of other comprehensive income (loss) on the consolidated statements of operations and comprehensive loss.

Business Combinations

6 unchanged sentences

When the Company issues stock-based or cash awards to an acquired company’s shareholders, the Company evaluates whether the awards are consideration or compensation for post-acquisition services.

The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond the acquisition date.

The evaluation includes, among other things, whether the vesting of the awards is contingent on the continued employment of the acquired company’s stockholders beyond

the acquisition date.

If continued employment is required for vesting, the awards are treated as compensation for post-acquisition services and recognized as expense over the requisite service period.

13 unchanged sentences

Available-for-sale debt instruments with original maturities at the date of purchase greater than three months and remaining maturities of less than one year are classified as short-term investments.

Available-for-sale debt instruments with original

maturities at the date of purchase and remaining maturities of greater than one year are classified as long-term investments.

Available-for-sale debt instruments with original maturities at the date of purchase and remaining maturities of greater than one year are classified as long-term investments.

The Company intends to sell such investments, if any, at or close to maturity.

The investments are designated as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in other comprehensive loss on the consolidated statements of operations and comprehensive loss, except for other-than-temporary impairments and credit losses.

The investments are designated as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in other comprehensive income (loss) on the consolidated statements of operations and comprehensive loss, except for other-than-temporary impairments and credit losses.

The Company determines the cost of the investment sold based on specific identification at the individual security level.

1 unchanged sentence

Other-Than-Temporary Impairment and Credit Losses

Prior to 2021, the Company followed the guidance in Accounting Standards Codification (“ASC”) Topic 320, Investments – Debt and Equity Securities in determining whether unrealized losses were other than temporary.

The Company adopted ASC Topic 326 for the year ended December 31, 2021, and now considers whether unrealized losses have resulted from a credit loss or other factors.

The Company adopted ASC Topic 326 for the year ended December 31, 2021, and considers whether unrealized losses have resulted from a credit loss or other factors.

The unrealized losses on the Company’s available-for-sale securities for the years ended December 31, 2023, 2022, or 2021 were caused by fluctuations in market value and interest rates as a result of the economic environment.

The Company concluded that an allowance for credit losses was unnecessary as of December 31, 2022 and 2021 and that there were no impairments as of December 31, 2020 considered as other-than-temporary because the decline in the market value was attributable to changes in market conditions and not credit quality, and that it is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value.

The Company concluded that an allowance for credit losses for its available-for-sale securities was unnecessary as of December 31, 2023 and 2022 because the decline in the market value was attributable to changes in market conditions and not credit quality, and that it is neither management’s intention to sell nor is it more likely than not that the

Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value.

There was no realized gain or loss on available-for-sale securities in the periods presented.

18 unchanged sentences

Receivables are stated at amounts estimated by management to be equal to their net realizable values.

The allowance for doubtful accounts is the Company's best estimate of the amount of expected credit losses.

The allowance for doubtful accounts is the Company's best estimate of the amount of expected credit losses on its accounts receivable.

The expectation of collectability is based on the Company's review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience.

1 unchanged sentence

Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of December 31, 2022 and 2021, accounts receivable was $ 3.9 million and $ 4.1 million, respectively.

There were no write-offs of accounts receivable for the years ended December 31, 2022, 2021, or 2020.

As of December 31, 2023 and 2022, gross accounts receivable was $ 6.7 million and $ 3.9 million, respectively.

There were immaterial write-offs of accounts receivable for the year ended December 31, 2023 and no write-offs of accounts receivable for the years ended December 31, 2022 or 2021.

As of December 31, 2023 and 2022, the Company had no allowances for doubtful accounts.

The Company does not have any off-balance sheet credit exposure related to its customers.

Other Long-Term Assets

Property and equipment, net was $ 3.0 million and $ 2.2 million as of December 31, 2022 and 2021, respectively, and is classified within other long-term assets on the consolidated balance sheets.

Property, Equipment, and Software, Net

Property, equipment, and software consist of purchased and internal-use software and website development, facility equipment and other tangible property, leasehold improvements, and assets not placed in service.

Property, equipment, and software are

depreciated or amortized using the straight-line method over the estimated useful lives ranging from two to seven years , with leasehold improvements depreciated over the shorter of their useful life or the related lease term.

Property and equipment are recorded at cost, less accumulated depreciation and amortization.

Maintenance and repair costs are charged to expense as incurred, and expenditures that extend the useful lives of assets are capitalized.

Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives ranging from two to five years and consist primarily of facility equipment, computers, equipment, furniture, and fixtures.

Capitalizable website and mobile application development and internal-use software costs, net was $ 8.2 million and $ 5.7 million as of December 31, 2022 and 2021, respectively, and is classified within other long-term assets on the consolidated balance sheets.

Capitalizable website and mobile application development and internal-use software costs are recorded at cost, less amortization.

The costs incurred during the website application and infrastructure stages as well as costs incurred during the graphics and content development stages are capitalized;

12 unchanged sentences

Under the quantitative impairment test, if the carrying amount of the Company’s reporting unit exceeds its fair value, the Company will recognize an impairment loss in an amount equal to that excess but limited to the total amount of goodwill.

Goodwill of $ 110.9 million was acquired during the second and third quarters of 2021 and no goodwill impairment was recorded for the years ended December 31, 2022 and 2021.

Intangible Assets

Intangible assets primarily includes trade name, customer relationships, and developed technology.

The Company amortizes such definite-lived intangible assets on a straight-line basis over the assets’ estimated useful lives of two to ten years , within general and administrative expenses on the consolidated statements of operations and comprehensive loss.

Goodwill of $ 110.9 million was acquired during 2021 and no goodwill impairment was recorded for the years ended December 31, 2023, 2022, and 2021.

Intangible Assets, Net

Intangible assets, net primarily includes trade name, customer relationships, and developed technology.

The Company amortizes such definite-lived intangible assets on a straight-line basis over the assets’ estimated useful lives of one to ten years , within general and administrative expenses on the consolidated statements of operations and comprehensive loss.

Impairment of Long-Lived Assets

3 unchanged sentences

If such assets are considered to be impaired, an impairment is recognized as the amount by which the carrying amount of the assets exceeds the estimated fair values of the assets.

As of December 31, 2021 and 2020, the Company determined that no events or changes in circumstances existed that would indicate any impairment of its long-lived assets.

The Company recognized $ 1.1 million of impairment charges on long-lived assets during the year ended December 31, 2022 in general and administrative expenses on the consolidated statements of operations and comprehensive loss.

The Company recognized $ 0.4 million and $ 1.1 million of impairment charges on long-lived assets during the years ended December 31, 2023 and 2022 in general and administrative expenses on the consolidated statements of operations and comprehensive loss.

There were no impairment charges on long-lived assets during the year ended December 31, 2021.

Operating Leases

The Company determines if an arrangement contains a lease at inception based on whether there is identified property, plant, or equipment and whether the Company controls the use of the identified asset throughout the period of use.

The Company leases two real estate facilities under non-cancelable operating leases with expiration dates in fiscal years 2025 and 2027.

The Company leases facilities for fulfillment and corporate purposes under non-cancelable operating leases with expiration dates between fiscal years 2025 and 2027.

The Company's operating leases are reflected in the operating lease right-of-use (“ROU”) assets and in the operating lease liabilities in the accompanying consolidated balance sheets.

4 unchanged sentences

The Company does not assume renewals or early terminations unless it is reasonably certain to exercise these options at commencement.

The Company monitors for events or changes in circumstances that require a reassessment of its leases.

When a reassessment results in the remeasurement of a lease liability, an adjustment is made to the carrying amount of the corresponding ROU asset.

The Company does not allocate consideration between lease and non-lease components.

6 unchanged sentences

The Company’s consolidated revenue primarily comprises online sales of health and wellness products and services through the Company’s websites and mobile applications, including prescription and non-prescription products.

In contracts that contain prescription products issued as the result of a consultation, revenue also includes medical consultation services provided by Affiliated Medical Groups (defined below).

In contracts that contain prescription products issued as the result of a consultation, revenue also includes medical consultation services and post-consultation service support provided by Affiliated Medical Groups (defined below).

Additionally, the Company offers a range of health and wellness products through wholesale partners.

8 unchanged sentences

The transaction price in the Company’s contracts with customers is the total amount of consideration to which the Company expects to be entitled in exchange for transferring products or services to the customer.

The Company’s contracts that contain prescription products issued as the result of a consultation include two performance obligations:

access to (i) products and (ii) consultation services.

The Company’s contracts for prescription refills and contracts that do not contain prescription products have a single performance obligation.

The Company’s contracts that contain prescription products issued as the result of a consultation primarily include the following performance obligations:

access to (i) products, as well as medication adjustments, as applicable, and (ii) consultation services, as well as post-consultation service support, as applicable.

The Company’s contracts for prescription refills and

contracts that do not contain prescription products have a single performance obligation.

Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product to the customer and, in contracts that contain services, by the provision of consultation services to the customer.

The Company satisfies its performance obligation for products at a point in time, which is upon delivery of the products to a third-party carrier.

The Company satisfies its performance obligation for services over the period of the consultation service, which is typically within one day.

The Company satisfies its performance obligation for products at a point in time, which is upon delivery of the products to a third-party carrier or customer warehouse.

The Company satisfies its performance obligation for consultation services typically within one day and for post-consultation service support over the contract term.

The customer obtains control of the products and services upon the Company’s completion of its performance obligations.

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The Company estimates refunds using the expected value method primarily based on historical refunds granted to customers.

The Company updates its estimate at the end of each reporting period and recognizes the estimated amount as contra-revenue

with a corresponding refund liability.

The Company updates its estimate at the end of each reporting period and recognizes the estimated amount as contra-revenue with a corresponding refund liability.

Sales, value-added, and other taxes are excluded from the transaction price and, therefore, from revenue.

The Company accounts for shipping activities, consisting of direct costs to ship products performed after the control of a product has been transferred to the customer, in cost of revenue.

For online sales, payment for prescription medication and non-prescription products is typically collected from the customer a few days in advance of product shipment.

For online sales, payment for prescription medication and non-prescription products is typically collected from the customer a few days in advance of product shipment in accordance with contract terms, with the exception of prepaid offerings for which payment is collected upfront with subsequent shipments typically occurring quarterly.

Contract liabilities are recorded when payments have been received from the customer for undelivered products or services and are recognized as revenue when the performance obligations are later satisfied.

Contract liabilities consisting of balances related to customer prepayments are recognized as current deferred revenue on the consolidated balance sheets since the associated revenue will be primarily recognized within the following month, with the exception of post-consultation service support and prepaid offerings which are recognized within the following year.

For wholesale arrangements, payments are collected in accordance with contract terms.

1 unchanged sentence

Cost of revenue consists of costs directly attributable to the products shipped and services rendered, including product costs, packaging materials, shipping costs, and labor costs directly related to revenue generating activities.

Costs related to free products where there is no expectation of future purchases from a customer and depreciation and amortization on property and equipment are considered to be operating expenses and are excluded from cost of revenue.

Costs related to free products where there is no expectation of future purchases from a customer and depreciation and amortization on property, equipment, and software are considered to be operating expenses and are excluded from cost of revenue.

Stock-Based Compensation

The fair value of stock options, equity-classified warrants issued to vendors, and restricted stock units (“RSUs”), are measured at the grant date fair value.

The fair value of stock options, equity-classified warrants issued to vendors, restricted stock units (“RSUs”), and performance RSUs (“PRSUs”) are measured at the grant date fair value.

The fair value of employee stock options and vendor warrants are generally determined using the Black-Scholes Merton (“BSM”) option-pricing model using various inputs, including estimates of expected volatility, term, risk-free rate, and future dividends.

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The Company has established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the Internal Revenue Code.

Beginning in 2021, the Company contributes 50 % of eligible employee’s elective deferrals up to an annual maximum of three thousand dollars per employee.

The Company recognized matching contributions cost of $ 1.2 million and $ 0.7 million for the years ended December 31, 2022 and 2021, respectively.

The Company contributes 50 % of eligible employee’s elective deferrals up to an annual maximum of three thousand dollars per employee.

The Company recognized matching contributions cost of $ 2.0 million, $ 1.2 million, and $ 0.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.

For the years ended December 31, 2023, 2022, and 2021, advertising costs for customer acquisition and content production were $ 390.3 million, $ 235.6 million, and $ 103.5 million, respectively.

1 unchanged sentence

The Company defers production costs associated with advertising campaigns until the date of first showing.

Other Comprehensive Loss

The Company’s other comprehensive loss is impacted by foreign currency translation and available-for-sale investment fair value adjustments.

Other Comprehensive Income (Loss)

The Company’s other comprehensive income (loss) is impacted by foreign currency translation and available-for-sale investment fair value adjustments.

The impact of foreign currency translation is affected by the translation of assets and liabilities of the Company’s United Kingdom foreign subsidiary, which is denominated in pounds sterling.

The primary assets and liabilities affecting the adjustments are cash and cash equivalents, other assets, accounts payable and accrued liabilities, and long-term liabilities.

The primary assets and liabilities affecting the adjustments are cash and cash equivalents, facility equipment, other assets, accounts payable and accrued liabilities, and long-term liabilities.

The impact of available-for-sale securities is primarily affected by unrecognized gains and losses related to fluctuations in the fair market value of the securities .

The Company’s operations have been financed primarily through the issuance of common and preferred stock.

Since inception, the Company has incurred negative cash flows as it is expending significant resources in expanding its activities.

This has resulted in losses from operations, which are expected to continue for at least the next 12 months, and an accumulated deficit.

The Company may require additional financing to fund operations to meet its business plan.

During the year ended December 31, 2022, the Company incurred a net loss of $ 65.7 million and had negative cash flows from operating activities of $ 26.5 million.

To date, the Company has financed its operations principally from the sale of its equity, revenue from the Hims & Hers platform, and the incurrence of indebtedness.

The Company has historically incurred negative cash flows from operating activities and significant losses from operations.

While the Company had positive cash flows from operating activities for the year ended December 31, 2023, the Company may incur operating losses in the future due to continued investments into its business.

During the year ended December 31, 2023, the Company incurred a net loss of $ 23.5 million and had positive cash flows from operating activities of $ 73.5 million.

As of December 31, 2023, the Company had an accumulated deficit of $ 368.2 million, cash and cash equivalents of $ 96.7 million, and short-term investments of $ 124.3 million.

2 unchanged sentences

Recently Issued Accounting Pronouncements

The Company does not expect that any recently issued accounting pronouncements will have a material effect on its financial statements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this Update expand reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for all public entities for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this Update expand income tax disclosure requirements, primarily through enhanced disclosures related to income taxes paid and the rate reconciliation.

ASU 2023-09 is effective for all public entities for annual periods beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied on a prospective basis and retrospective application is permitted.

The Company is evaluating the method of adoption and the impact of this guidance on its consolidated financial statements and related disclosures.

Recapitalization

1 unchanged sentence

Transaction costs of $ 18.7 million, which consist of legal, accounting, and other professional services directly related to the Merger, are included in additional paid-in capital on the consolidated balance sheet.

On the Closing Date, each Hims stockholder received approximately 0.4530 shares of the

Company’s Class A common stock, par value $ 0.0001 per share, for each share of Hims Class A common stock, par value $ 0.000001 per share, that such stockholder owned (with the CEO receiving 0.4530 shares of the Company’s Class V common stock, par value $ 0.0001 per share, for each share of Hims Class V common stock, par value $ 0.000001 per share, that the CEO owned).

On the Closing Date, each Hims stockholder received approximately 0.4530 shares of the Company’s Class A common stock, par value $ 0.0001 per share, for each share of Hims Class A common stock, par value

$ 0.000001 per share, that such stockholder owned (with the CEO receiving 0.4530 shares of the Company’s Class V common stock, par value $ 0.0001 per share, for each share of Hims Class V common stock, par value $ 0.000001 per share, that the CEO owned).

Each Hims stockholder also received 0.0028 warrants exercisable for the Company’s Class A common stock, for each share of Hims Class A or Class V common stock owned by such stockholder prior to the Merger and earn-out shares at an exchange ratio of 0.0443 .

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From the acquisition date through December 31, 2021, the Company recognized revenue related to Apostrophe of approximately $ 11 million.

Incremental pro forma revenue attributed to Apostrophe, assuming the acquisition had occurred as of January 1, 2020, would have been approximately $ 21 million and $ 13 million for the years ended December 31, 2021 and 2020, respectively.

Incremental pro forma revenue attributed to Apostrophe, assuming the acquisition had occurred as of January 1, 2021, would have been approximately $ 21 million for the year ended December 31, 2021.

The pro forma revenue is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on January 1, 2021.

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Gains Unrealized

Treasury bills $ 63,809 $ 24 $ — $ 63,833

Corporate bonds 39,152 18 ( 1 ) 39,169

Government and government agency 20,624 — ( 14 ) 20,610

Asset-backed bonds 705 1 — 706

Total short-term investments $ 124,290 $ 43 $ ( 15 ) $ 124,318

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Cost Unrealized

Gains Unrealized

Corporate bonds $ 99,672 $ — $ ( 106 ) $ 99,566

Asset-backed bonds 29,507 ( 19 ) 29,488

Government and government agency 33,317 17 ( 47 ) 33,287

Total short-term investments $ 132,989 $ 17 $ ( 153 ) $ 132,853

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Total prepaid expenses and other current assets $ 21,608 $ 15,408

Intangible Assets

Intangible assets as of December 31, 2022 consist of the following (in thousands):

Property, Equipment, and Software, Net

Property, equipment, and software, net consist of the following (in thousands):

Purchased and internal-use software and website development $ 22,970 $ 12,055

Facility equipment and other tangible property 8,254 3,598

Leasehold improvements 2,256 155

Assets not placed in service 14,907 1,632

Total property, equipment, and software 48,387 17,440

accumulated depreciation and amortization ( 12,244 ) ( 6,241 )

Total property, equipment, and software, net $ 36,143 $ 11,199

Depreciation and amortization expense for property, equipment, and software was $ 6.0 million, $ 3.4 million, and $ 2.0 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Impairment expense for property, equipment, and software was $ 0.4 million for each of the years ended December 31, 2023 and 2022.

There was no impairment expense for the year ended December 31, 2021.

Intangible Assets, Net

Intangible assets, net as of December 31, 2023 consist of the following (in thousands):

Amount Accumulated Amortization and Impairment Net

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Intangible assets, net $ 28,973 $ ( 10,399 ) $ 18,574 7.3

Intangible assets as of December 31, 2021 consist of the following (in thousands):

Intangible assets, net as of December 31, 2022 consist of the following (in thousands):

Amount Accumulated

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Intangible assets, net $ 28,751 $ ( 6,910 ) $ 21,841 8.0

Amortization expense for intangible assets was $ 4.1 million, $ 2.1 million, and less than $ 0.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Amortization expense for intangible assets was $ 3.5 million, $ 4.1 million, and $ 2.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Impairment expense for intangible assets was $ 0.7 million for the year ended December 31, 2022.

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Accrued liabilities consist of the following (in thousands):

Payroll $ 4,999 $ 3,363

Marketing $ 12,331 $ 4,990

Payroll 7,888 4,999

Professional services 5,341 643

Tax 2,009 963

Product and shipping 562 263

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Operating Leases

In January 2020, the Company entered into a 63 -month non-cancelable lease for 302,880 square feet of warehouse space in New Albany, Ohio.

The lease commenced on June 1, 2020.

Total minimum lease payments are $ 7.9 million, net of rent abatement for an initial three-month period and with an annual escalation of 2.5 %.

The Company has the option to extend the lease term for a period of five years .

The Company has various operating leases for fulfillment and corporate facilities with lease periods expiring between fiscal years 2025 and 2027.

The operating lease agreements provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised.

The Company utilizes the reasonably certain threshold criteria in determining which options it will exercise.

In January 2022, the Company entered into a 62 -month non-cancelable lease for 24,465 square feet of warehouse, distribution, and pharmacy space in Gilbert, Arizona.

The lease commenced on September 1, 2022.

Total minimum lease payments are $ 1.5 million, net of rent abatement for an initial two-month period and with annual escalation of 3.0 %.

The Company has the option to extend the lease term for a period of five years .

For the years ended December 31, 2022 and 2021, the Company recorded operating lease costs of $ 1.9 million and $ 1.8 million, respectively, including variable operating lease costs of $ 0.3 million in both years.

For the years ended December 31, 2022 and 2021, operating cash flows used for operating leases were $ 1.6 million and $ 1.5 million, respectively.

As of December 31, 2022, the weighted average remaining lease term and weighted average discount rate was 3.2 years and 4.7 %, respectively.

During the year ended December 31, 2023, a reassessment due to significant leasehold improvements to the Company’s leased facilities resulted in the remeasurement of the lease liability and an adjustment of $ 5.7 million to the carrying amount of the corresponding ROU asset.

For the years ended December 31, 2023, 2022, and 2021, the Company recorded operating lease costs of $ 2.4 million, $ 1.9 million, and $ 1.8 million, respectively, including variable operating lease costs of $ 0.4 million for the year ended December 31, 2023 and $ 0.3 million for each of the years ended December 31, 2022 and 2021.

For the years ended December 31, 2023, 2022 and 2021, operating cash flows used for operating leases were $ 1.9 million, $ 1.6 million, and $ 1.5 million, respectively.

As of December 31, 2023, the weighted average remaining lease term and weighted average discount rate were 6.2 years and 8.9 %, respectively.

Future minimum lease payments under the Company's non-cancelable operating lease with an initial lease term in excess of one year subsequent to December 31, 2023 are as follows (in thousands):

2029 and thereafter 2,827

Gross lease payments 13,018

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Present value of net future minimum lease payments $ 9,948

As of December 31, 2022, the present value of net future minimum lease payments of $ 5.3 million is recorded:

(i) $ 1.7 million within the current liabilities;

and (ii) $ 3.6 million within long-term liabilities on the consolidated balance sheet.

Variable Interest Entities

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For the years ended December 31, 2023, 2022, and 2021, the VIEs charged the Company $ 96.3 million, $ 64.2 million, and $ 23.6 million, respectively, for services rendered.

For the years ended December 31, 2022, 2021, and 2020 operations of the VIEs generated net income of $ 9.1 million and net losses of $ 3.3 million, and $ 1.9 million, respectively, inclusive of administrative expenses.

For the years ended December 31, 2023, 2022, and 2021 operations of the VIEs generated net income of $ 3.3 million and $ 9.1 million, and a net loss of $ 3.3 million, respectively, inclusive of administrative expenses.

Fair Value Measurements

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2022, is as follows (in thousands):

The Company’s fair value hierarchy for its financial assets that are measured at fair value on a recurring basis as of December 31, 2023, is as follows (in thousands):

Level 1 Level 2 Level 3 Total

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Money market funds $ 42,492 $ — $ — $ 42,492

Government bonds — 11,315 — 11,315

Short-term investments:

Treasury bills 63,833 — — 63,833

Corporate bonds — 39,169 — 39,169

Government and government agency — 20,610 — 20,610

Asset-backed bonds — 706 — 706

Restricted cash:

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Total assets $ 107,181 $ 60,485 $ — $ 167,666

Earn-out liabilities $ — $ — $ 2,975 $ 2,975

Total liabilities $ — $ — $ 2,975 $ 2,975

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2022, is as follows (in thousands):

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Corporate bonds — 99,566 — 99,566

Government bonds — 29,488 — 29,488

Government and government agency — 33,287 — 33,287

Restricted cash:

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Total assets $ 25,462 $ 144,168 $ — $ 169,630

Earn-out liabilities $ — $ — $ 1,999 $ 1,999

Earn-out liability $ — $ — $ 2,975 $ 2,975

Total liabilities $ — $ — $ 2,975 $ 2,975

The fair values of cash, accounts receivable, accounts payable, and accrued liabilities approximated their carrying values as of December 31, 2023 and 2022, due to their short-term nature.

All other financial instruments, except for earn-out liabilities, are valued either based on recent trades of securities in active markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

All other financial instruments, except for earn-out liability, are valued either based on recent trades of securities in active markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

During the years ended December 31, 2023, 2022, and 2021, the Company had no transfers between levels of the fair value hierarchy of its assets or liabilities measured at fair value.

As of December 31, 2022 and 2021, the long-term earn-out liability, which is solely related to the acquisition of HHL, is classified as a Level 3 fair value measurement containing significant unobservable inputs including estimates of achieving certain revenue targets.

At inception, the fair value of the earn-out liability associated with the HHL acquisition was determined based on revenue projections and probability of achievement of revenue targets as evaluated using a Monte Carlo simulation.

As of December 31, 2022, the earn-out liability, which was solely related to the acquisition of HHL, was classified as a Level 3 fair value measurement containing significant unobservable inputs including estimates of achieving certain revenue targets.

At inception, the fair value of the earn-out liability associated with the HHL acquisition was determined based on revenue

projections and probability of achievement of revenue targets as evaluated using a Monte Carlo simulation.

The following assumptions were used to determine the fair value at inception:

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Counterparty discount rate 5.0 %

The fair value of the earn-out liability is remeasured at each reporting period.

This change in fair value is related to contingent consideration and compensation costs (see Note 14 – Stockholders’ Equity) and is recognized in other income (expense) and general and administrative expenses, respectively, on the consolidated statements of operations and comprehensive loss.

As of December 31, 2023, all contingencies related to the HHL earn-out liability were resolved and the final earn-out payout was determined based on actual revenue from the acquisition date through December 31, 2023.

Therefore, the HHL earn-out liability was removed from the fair value hierarchy and reclassified to earn-out payable.

The fair value of the earn-out liability was remeasured at each reporting period.

This change in fair value was related to contingent consideration and compensation costs (see Note 15 – Stockholders’ Equity) and was recognized in other income (expense) and general and administrative expenses, respectively, on the consolidated statements of operations and comprehensive loss.

The change in the fair value of earn-out liabilities is as follows (in thousands):

Balance at December 31, 2021 $ 1,999

HHL acquisition 1,208

Apostrophe acquisition 32,650

Change in fair value due to revaluation and service-based vesting 976

Reclassification to earn-out payable ( 42,834 )

Balance at December 31, 2022 2,975

Change in fair value due to revaluation and service-based vesting 4,437

Reclassification to earn-out payable ( 7,412 )

Balance at December 31, 2023 $ —

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Purchase Obligations

The Company has contractual obligations to make future purchases, primarily related to cloud-based software contracts used in operations.

As of December 31, 2022, purchase obligations were $ 1.4 million, with $ 1.2 million payable in 2023 and $ 0.2 million payable in 2024.

The Company has non-cancelable contractual obligations to make future purchases, primarily related to cloud-based software contracts used in operations.

As of December 31, 2023, purchase obligations were $ 7.3 million, with $ 4.8 million payable in 2024, $ 2.4 million payable in 2025, and $ 0.1 million payable in 2026.

Lease Commitments

Refer to Note 11 – Operating Leases for discussion of the Company’s future lease commitments.

Legal Proceedings

From time to time, the Company is a party to various litigation, claims, and other legal and administrative proceedings arising in the ordinary course of business.

From time to time, the Company is a party to litigation, various claims, and other legal and administrative proceedings arising in the ordinary course of business.

Some of these claims, lawsuits, and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions, or relief.

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The rights are identical, including liquidation and dividend rights, except Class V common stock has additional voting rights.

During the years ended December 31, 2022 and 2021, the Company released 2,333,695 and 1,810,545 gross shares of Class A common stock upon vesting of RSUs.

In connection with the releases, 701,584 and 620,759 shares of Class A common stock were withheld for the payment of employee taxes.

There were no RSU releases for year ended December 31, 2020.

Share Repurchase Program

On October 26, 2023, the Board of Directors authorized and approved a share repurchase program pursuant to which the Company may repurchase up to $ 50.0 million of the Company’s Class A common stock.

The program expires on November 8, 2025.

The Company intends to use the program to repurchase shares on a discretionary basis from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases, privately negotiated transactions or other means, including through 10b5-1 trading plans.

This repurchase program may be suspended or discontinued at any time.

During the year ended December 31, 2023, the Company repurchased and retired 237,458 shares of Class A common stock under the program for $ 2.0 million.

As of December 31, 2023, $ 48.0 million remains available under the program.

During the years ended December 31, 2023, 2022, and 2021, the Company released 5,201,501 , 2,333,695 , and 1,810,545 gross shares of Class A common stock, respectively, upon vesting of RSUs.

In connection with the releases, 1,729,045 , 701,584 , and 620,759 shares of Class A common stock, respectively, were withheld for the payment of employee taxes.

2017 Stock Plan and 2020 Equity Incentive Plan

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As of the effective date of the 2020 Plan, no further stock awards have been or will be granted under the 2017 Plan.

Through December 31, 2022, 1,862,078 shares of Class A common stock subject to awards granted under the 2017 Plan that were outstanding on the Closing date and forfeited after the adoption of the 2020 Plan were added to the 2020 Plan reserve.

As of December 31, 2022, there were 33,101,677 and 10,963,031 shares of Class A common stock reserved and available for issuance, respectively, under the 2020 Plan.

For the year ended December 31, 2023, 89,810 shares of Class A common stock subject to awards granted under the 2017 Plan that were forfeited after the adoption of the 2020 Plan were added to the 2020 Plan reserve.

Additionally, on January 1, 2023, 10,421,465 shares of Class A common stock were automatically added to the 2020 Plan reserve.

Therefore, as of December 31, 2022, there were 33,101,677 shares of Class A common stock reserved and 10,963,031 shares of Class A common stock available for grant under the 2020 Stock Plan.

Therefore, as of December 31, 2023, there were 43,612,952 shares of Class A common stock reserved and 12,577,863 shares of Class A common stock available for issuance under the 2020 Stock Plan.

There were no more shares available for grant under the 2017 Plan since the 2017 Plan was replaced by the 2020 Plan.

2020 Employee Stock Purchase Plan

In January 2021, the Board of Directors adopted the Company’s Employee Stock Purchase Plan (“ESPP”), which became effective immediately prior to the Closing Date.

In January 2021, the Board of Directors adopted the Company’s Employee Stock Purchase Plan (“ESPP”).

The total shares of Class A common stock initially reserved under the ESPP is limited to 4,000,000 shares of Class A common stock.

Class V common stock issued and outstanding on the last day of the preceding fiscal year, (ii) 12,000,000 shares of Class A common stock, or (iii) a number of shares of Class A common stock determined by the Board of Directors.

On January 1, 2022, 2,047,919 shares of Class A common stock were automatically added to the ESPP reserve.

Therefore, as of December 31, 2022, 6,047,919 shares of Class A common stock have been reserved for issuance under the ESPP.

During the year ended December 31, 2022, the Company issued 393,528 shares of Class A common stock under the ESPP.

Beginning on January 1, 2022 and ending on January 1, 2041 (unless extended by the Board of Directors and approved by the Company’s shareholders), the number of authorized shares of common stock under the ESPP will automatically increase each fiscal year by the lesser of (i) 1 % of the total number of Class A and Class V common stock issued and outstanding on the last day of the preceding fiscal year, (ii) 12,000,000 shares of Class A common stock, or (iii) a number of shares of Class A common stock determined by the Board of Directors.

As of December 31, 2022, there were 6,047,919 and 5,654,391 shares of Class A common stock reserved and available for issuance, respectively, under the ESPP.

There were no shares added to the ESPP reserve on January 1, 2023.

Therefore, as of December 31, 2023, there were 6,047,919 shares of Class A common stock reserved for issuance under the ESPP.

During the years ended December 31, 2023 and 2022, respectively, the Company issued 594,885 and 393,528 shares of Class A common stock under the ESPP.

No shares were issued under the ESPP during the year ended December 31, 2021.

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Employees participating in the ESPP commence payroll withholdings that accumulate through the end of the respective offering period.

As of December 31, 2022, $ 0.3 million has been withheld via employee payroll deductions for employees who have opted to participate in the purchase period ending May 2023.

As of December 31, 2023, $ 0.5 million has been withheld via employee payroll deductions for employees who have opted to participate in the purchase periods ending May 2024.

As of December 31, 2023, there was $ 2.0 million of unrecognized stock-based compensation related to the ESPP which is expected to be recognized over a weighted average period of 1.43 years.

Stock Options

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The grant date fair value was $ 16.6 million for these awards.

The $ 22.99 per share price threshold related to awards for the 3,246,139 stock options was achieved in February 2021 subsequent to the Merger and, therefore, the Company recognized all $ 11.3 million of expense related to the grant during the three months ended March 31, 2021 due to achievement of the market condition.

The $ 22.99 per share price threshold related to awards for the 3,246,139 stock options was achieved in February 2021.

As of December 31, 2023, 313,257 of these stock options have been exercised at a weighted average exercise price of $ 2.43 .

As of December 31, 2023, there was $ 0.4 million of remaining compensation expense to be recognized for the remaining 1,623,070 stock options over a period of 0.29 years.

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The total grant date fair value was $ 3.8 million for this award.

As of December 31, 2022, there was $ 2.6 million of remaining compensation expense to be recognized over a period of 3.15 years.

As of December 31, 2023, no shares have vested and there was $ 1.1 million of remaining compensation expense to be recognized over a period of 2.15 years.

The grant date fair value of the Company’s stock options granted (excluding the stock options granted to the CEO outlined above) was estimated using the following weighted average assumptions:

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Granted 603 11.53

Exercised (including early exercised options vested during the period) ( 1,728 ) 1.42

Exercised ( 912 ) 1.74

Forfeited and expired ( 357 ) 6.50

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12.21 – 15.17

865 8.19 401 8.03

RSUs for new employees generally vest over four years , with 25 % vesting one year after the vesting commencement date on the first Company Quarterly Vesting Date (defined below) and the remaining grant vesting quarterly thereafter on the specified vesting dates of March 15, June 15, September 15, and December 15 (each, a “Company Quarterly Vesting Date” or collectively, “Company Quarterly Vesting Dates”).

Additional RSUs granted to current employees generally vest quarterly on Company Quarterly Vesting Dates over four years .

RSU activity is as follows (in thousands, except for weighted average grant date fair value):

RSU activity (excluding the performance RSUs outlined below) is as follows (in thousands, except for weighted average grant date fair value):

Shares Weighted Average

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Unvested at December 31, 2023 14,483 $ 8.08

Included in the above activity are 476,308 earn-out RSUs and 9,478 Parent Warrant RSUs issued to the CEO as part of the Merger that vest in accordance with the same market conditions as the CEO stock options, of which 317,539 earn-out RSUs and 6,319 Parent Warrant RSUs have vested as of December 31, 2022.

In addition, the Company granted 45,297 RSUs in 2020 and 4,431 earn-out RSUs and 88 Parent Warrant RSUs as part of the Merger in January 2021 to a non-executive officer that vest upon meeting certain revenue targets from the sale of specific products, of which 15,099 RSUs, 1,477 earn-out RSUs, and 30 Parent Warrant RSUs have vested as of December 31, 2022.

Included in the above activity are 476,308 earn-out RSUs and 9,478 Parent Warrant RSUs issued to the CEO in January 2021 that vest in accordance with the same market conditions as the CEO stock options, of which 317,539 earn-out RSUs and 6,319 Parent Warrant RSUs have vested as of December 31, 2023.

In addition, the Company granted 45,297 RSUs in 2020 and 4,431 earn-out RSUs and 88 Parent Warrant RSUs in January 2021 to a non-executive officer that vest upon meeting certain revenue targets from the sale of specific products, all of which have vested as of December 31, 2023.

These grants are also included in the above activity.

As of December 31, 2022, there was unrecognized stock-based compensation related to unvested RSUs of $ 59.1 million, which is expected to be recognized over a weighted average period of 3.02 years.

As of December 31, 2023, $ 103.8 million of unrecognized stock-based compensation related to unvested RSUs (excluding the performance RSUs outlined below) which is expected to be recognized over a weighted average period of 2.91 years.

Performance RSUs

On March 1, 2023, the Board of Directors granted awards of 1,115,709 target shares of PRSUs to certain executive officers.

As of December 31, 2023, 11,408 shares subject to PRSUs have been forfeited.

The PRSUs vest at the end of a three-year period,

with the number of shares earned ranging from 0 % to 200 % of the target, provided that (i) the recipient remains employed at the end of the period and (ii) the Company achieves certain performance metrics related to the 2025 fiscal year.

The total grant date fair value of the awards was $ 12.9 million, which was based on the probable achievement of 100 % of the target.

The Company will continue to evaluate the likelihood of achieving the performance metrics on a quarterly basis.

As of December 31, 2023, there was unrecognized stock-based compensation expense related to unvested PRSUs of $ 11.5 million, which is expected to be recognized over a weighted average period of 2.21 years.

As of December 31, 2023, there were 462,335 Class A common stock warrants outstanding and exercisable issued to nonemployees in connection with vendor service arrangements, with a weighted average exercise price of $ 1.75 , a weighted average contractual term of 7.01 years, and an aggregate intrinsic value of $ 3.3 million.

Upon the exercise of outstanding warrants, vendors also have the right to receive 45,225 shares of Merger consideration, consisting of the holders’ allocation of earn-out consideration.

Upon the exercise of outstanding warrants, vendors also have the right to receive 45,225 shares of Class A common stock.

As of December 31, 2023, all stock-based compensation expense related to vendor warrants and associated earn-out shares has been recognized.

As of December 31, 2022, there were 98,723 Class A common stock warrants outstanding and exercisable issued in connection with a pre-Merger debt arrangement, with a weighted average exercise price of $ 6.96 , a weighted average contractual term of 6.71 years, and no aggregate intrinsic value.

These debt warrants were recorded in additional paid-in capital as a result of their conversion to equity-classified Class A common stock warrants in connection with the Merger.

As part of the acquisitions of HHL and Apostrophe, the Company issued 177,327 and 5,742,378 shares of Class A common stock, respectively.

In each acquisition, the Company also issued additional shares of Class A common stock that are subject to vesting.

As of December 31, 2023, there were 98,723 Class A common stock warrants outstanding and exercisable issued in connection with a historical debt arrangement, with a weighted average exercise price of $ 6.96 , a weighted average contractual term of 6.71 years, and an aggregate intrinsic value of $ 0.2 million.

These debt warrants were settled in additional paid-in capital as a result of their conversion to equity-classified Class A common stock warrants.

Stock Subject to Vesting and Earn-out Share Liability

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Accordingly, the Company has recognized stock-based compensation expense related to these awards for the years ended December 31, 2023, 2022, and 2021.

The expense will be recognized over a four-year vesting period with 25 % vesting one year after the acquisition date and the remaining vesting quarterly thereafter.

The expense is being recognized over a four-year vesting period with 25 % vesting one year after the acquisition date and the remaining vesting quarterly thereafter.

As of December 31, 2023, there was unrecognized stock-based compensation expense of $ 2 million, which will be recognized over a weighted average period of 1.45 years.

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Accordingly, the Company has recognized stock-based compensation expense related to these awards for the years ended December 31, 2023, 2022, and 2021.

The expense will be recognized over a three-year vesting period with 17 % vesting 6 months after the acquisition date and the remaining vesting quarterly thereafter.

The expense is being recognized over a three-year vesting period with 17 % vesting 6 months after the acquisition date and the remaining vesting quarterly thereafter.

As of December 31, 2023, there was unrecognized stock-based compensation expense of $ 3.7 million, which will be recognized over a weighted average period of 0.50 years.

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Total stock-based compensation expense $ 66,080 $ 42,817 $ 67,211

The Company capitalized $ 0.6 million and $ 0.7 million of stock-based compensation as internal-use software for the years ended December 31, 2022 and 2021, respectively, and none for the year ended December 31, 2020.

The Company capitalized $ 1.7 million, $ 0.6 million, and $ 0.7 million of stock-based compensation, as internal-use software for the years ended December 31, 2023, 2022, and 2021 , respectively.

Related-Party Transactions

Atomic Labs, LLC (“Atomic Labs”) is a related-party venture capital startup studio that launched the Company, providing initial capital and governance.

The Company utilized operational support from Atomic Labs, primarily consisting of providing office space, conducting back-office professional services, and administering operating expenses.

Additionally, an affiliated company of Atomic Labs provides professional services to the Company, primarily to support engineering and operations

All services were provided at cost.

For the years ended December 31, 2022, 2021, and 2020, the Company recorded a total of $ 3.6 million, $ 3.5 million, and $ 3.4 million, respectively, for payments made to an affiliated company of Atomic Labs for services performed and costs incurred on behalf of the Company.

In addition, for the years ended December 31, 2022, 2021, and 2020, the Company recorded $ 1.0 million, $ 0.7 million, and $ 0.1 million, respectively, for payments made to Vouched, a related-party company that provides identity verification services.

For the years ended December 31, 2023, 2022, and 2021, the Company recorded a total of $ 4.6 million, $ 3.6 million, and $ 3.5 million, respectively, within operating expenses on the consolidated statements of operations and comprehensive loss for payments made to Terminal, Inc., a related party company that provides professional services to the Company, primarily to support engineering and operations functions.

In addition, for the years ended December 31, 2023, 2022, and 2021, the Company recorded $ 2.1 million, $ 1.0 million, and $ 0.7 million, respectively, within operating expenses on the consolidated statements of operations and comprehensive loss for payments made to Vouched, a related-party company that provides identity verification services.

Basic and Diluted Net Loss per Share

Prior to the Merger and prior to effecting the recapitalization, the Company had two classes of common stock:

Hims Class A and Hims Class F common stock.

The rights of the holders of Hims Class A and Hims Class F common stock were identical, including the liquidation and dividend rights, except with respect to electing members of the Board of Directors and voting rights.

As the liquidation and dividend rights were identical, undistributed earnings and losses were allocated on a proportionate basis and the resulting net loss per share attributable to common stockholders was the same for both Hims Class A and Hims Class F common stock on an individual and combined basis.

Subsequent to the Merger, the Company continues to have two classes of common stock:

Class A and Class V common stock.

Similar to the previous structure, the rights are identical, including liquidation and dividend rights, except Class V common stock has additional voting rights.

The Company uses the two-class method to calculate net loss per share.

No dividends were declared or paid for the years ended December 31, 2023, 2022, and 2021.

Undistributed earnings for each period are allocated to participating securities, including the redeemable convertible preferred stock, based on the contractual participation rights of the security to share in the current earnings as if all current period earnings had been distributed.

As there is no contractual obligation for the redeemable convertible preferred stock to share in losses, the Company’s basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average shares of common stock outstanding during periods with undistributed losses.

Undistributed earnings for each period are allocated equally to participating securities based on the contractual participation rights of the security to share in the current earnings as if all current period earnings had been distributed.

The Company’s basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average shares of common stock outstanding during periods with undistributed losses.

The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts):

1 unchanged sentence

2023 2022 2021

Class A Class V Class A Class V Class A Class F

Class A Class V Class A Class V Class A Class V

Net loss attributable to common stockholders $ ( 22,604 ) $ ( 942 ) $ ( 62,988 ) $ ( 2,690 ) $ ( 103,082 ) $ ( 4,577 )

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Basic net loss per share is the same as diluted net loss per share attributable to common stockholders for the years ended December 31, 2023, 2022, and 2021, because the inclusion of potential shares of common stock would have been anti-dilutive for the periods presented.

There were no redeemable shares during the years ended December 31, 2022 or 2021.

During the year ended December 31, 2020, weighted average Hims Class A common shares presented excludes 165,133 shares subject to redemption.

Redeemable shares do not absorb losses.

The following table discloses weighted-average securities that were not included in the computation of diluted net loss per share as their inclusion would have been anti-dilutive:

4 unchanged sentences

Common stock issued subject to vesting 1,090,181 2,027,852 1,419,613

Common stock issuable under the ESPP 603,603 136,538 —

PRSUs 928,642 — —

Warrants to purchase Class A common stock 561,058 561,058 4,778,003

Common stock issuable under the ESPP 404,648 603,603 136,538

Common stock issued for early exercise of stock options — 70,257 196,431

1 unchanged sentence

Common stock issued for exercise of stock options subject to nonrecourse promissory notes — — 874,312

Warrants to purchase redeemable convertible preferred stock — — 931,668

For financial reporting purposes, loss before income taxes includes the following (in thousands):

4 unchanged sentences

Loss before income taxes $ ( 21,571 ) $ ( 65,709 ) $ ( 110,795 )

The (benefit) provision for income taxes consisted of the following (in thousands):

The provision (benefit) for income taxes consisted of the following (in thousands):

Year Ended December 31,

2 unchanged sentences

State 1,456 563 252

Foreign — — —

Total current provision 1,988 563 252

3 unchanged sentences

Total deferred benefit ( 13 ) ( 594 ) ( 3,388 )

Total (benefit) provision for income taxes $ ( 31 ) $ ( 3,136 ) $ 127

The (benefit) provision for income taxes differs from the amounts computed by applying the statutory federal income tax rate of 21% to pretax loss as follows (in thousands):

Total provision (benefit) for income taxes $ 1,975 $ ( 31 ) $ ( 3,136 )

The provision (benefit) for income taxes differs from the amounts computed by applying the statutory federal income tax rate of 21% to pretax loss as follows (in thousands):

Year Ended December 31,

7 unchanged sentences

Change in valuation allowance 1,330 7,794 15,971

Research and development credits

( 5,398 ) — —

Non-deductible expenses 714 613 —

Other, net ( 136 ) ( 62 ) ( 1,371 )

4 unchanged sentences

Net operating loss carryforwards $ 53,309 $ 67,214

Research and other credits 3,779 —

Capitalized research and development 15,106 —

Accrued expenses and reserves 2,164 1,952

1 unchanged sentence

Inventory 1,890 2,338

Other intangibles 487 49

Other intangible assets 350 487

Deferred revenue 124 17

5 unchanged sentences

Deferred tax liabilities:

Other intangibles ( 5,623 ) ( 6,933 )

Other intangible assets ( 4,777 ) ( 5,623 )

Fixed assets ( 1,532 ) ( 1,722 )

Prepaid expenses ( 1,825 ) —

Operating lease right-of-use assets

( 2,519 ) ( 1,285 )

Other deferred tax liabilities ( 1,859 ) ( 70 )

5 unchanged sentences

Accordingly, the Company has recorded a valuation allowance against its deferred tax assets.

The net deferred tax liability is primarily the result of acquired intangibles for which there is no tax basis.

The Company intends to continue maintaining a full valuation allowance on all deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

However, the Company believes that, within a few years, sufficient positive evidence may become available to reach a conclusion that a significant portion of the valuation allowance will no longer be needed.

A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is actually able to achieve.

Additionally, income tax credit estimates could change in the near future due to changes in economic circumstances resulting in the pursuit of additional credits that currently would not be economically beneficial to pursue.

The net deferred tax liability is primarily the result of acquired intangible assets for which there is no tax basis.

The valuation allowance increased by $ 1.1 million and $ 8.0 million during the years ended December 31, 2023 and 2022, respectively.

During 2021, the Company recorded a one-time benefit of approximately $ 3.1 million due to the release of the valuation allowance as a result of the Apostrophe acquisition.

As of December 31, 2023, the Company has $ 186.1 million, $ 154.8 million, and $ 10.8 million in federal, state, and foreign loss carryforwards (not tax effected), respectively, of which $ 186.1 million, $ 17.5 million, and $ 10.8 million in federal, state, and foreign loss carryforwards do not expire.

The remaining federal and state loss carryforwards begin to expire in 2036 and 2023, respectively.

The remaining state loss carryforwards begin to expire in 2024.

As of December 31, 2023, the Company had $ 6.1 million of federal tax credit carryforwards, prior to the netting of uncertain tax positions, that will begin to expire in 2041.

Internal Revenue Code Sections 382 and 383 place a limitation on the amount of taxable income that can be offset by carryforward tax attributes, such as net operating losses or tax credits, after a change in control.

2 unchanged sentences

As a result of issuances of different classes of preferred stock to investors in 2017, 2018, and 2019, the Company triggered “ownership change(s)” as defined in Section 382 and related provisions.

The Company believes that some of its net operating losses may be limited by these ownership changes but that any limitation would not have a significant impact to the financial statements since there is no utilization of the net operating losses and a valuation allowance exists against the net operating losses.

Some of the Company’s net operating losses are limited by these ownership changes but the annual limitation does not have a significant impact on the consolidated financial statements.

Subsequent ownership changes may subject the Company to annual limitations of its net operating losses.

Such annual limitation could result in the expiration of the net operating loss and credit carryforwards before utilization.

Use of certain losses incurred within the U.K.

are also limited, but any limitation would not have a significant impact to the financial statements since a valuation allowance exists against the net operating losses.

The Company has incurred net operating losses since inception, and it does not have any significant unrecognized tax benefits.

Any adjustments to the Company’s uncertain tax positions would result in an adjustment of its net operating loss and valuation allowance rather than resulting in an impact to the effective tax rate.

It is not expected that there will be any material change in the unrecognized tax benefits within the next 12 months.

The Company files income tax returns in the U.S., U.K., and various state and local jurisdictions.

Such annual limitations could result in the expiration of the net operating loss and credit carryforwards before utilization.

A full valuation allowance exists on the net operating loss carryforward.

The Company did no t have any unrecognized tax benefits during the years ended December 31, 2022 and 2021.

Changes in unrecognized tax benefits for the year ended December 31, 2023, excluding interest and penalties, were as follows (in thousands):

Balance at December 31, 2022 $ —

Increases in balances related to prior year tax positions

Increases in balances related to current year tax positions

Balance at December 31, 2023 $ 2,313

Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next 12 months due to tax examination changes, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, the Company does not anticipate any significant changes to its unrecognized tax benefits over the next 12 months.

Any adjustments to the Company’s uncertain tax positions would result in an adjustment to its deferred tax asset carryforwards and valuation allowance rather than resulting in an impact to the effective tax rate.

During the years ended December 31, 2023, 2022, and 2021, no interest or penalties were required to be recognized relating to unrecognized tax benefits.

The Company files income tax returns in the United States, United Kingdom, and various state and local jurisdictions.

Due to the net operating loss carryforward, the statute of limitations is open for 2017 and forward for all jurisdictions, none of which are currently under examination by any tax authorities.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The new legislation imposes a 15% minimum tax on certain corporation’s book income and a 1% excise tax on certain stock buybacks.

While the Company may be subject to the new excise tax on certain stock buybacks in the future, the enactment of the IRA did not result in any material adjustments to the consolidated financial statements for the year ended December 31, 2022 .

Subsequent Events

In February 2024, the Company entered into a 28 -month non-cancelable lease for 29,467 square feet of office, warehouse, and pharmacy space in Gilbert, Arizona.

The lease will commence when lessor construction on the space is substantially complete.

Total minimum lease payments are $ 1.0 million, net of rent abatement for an initial two-month period and with an escalation of 4 % at the end of the first year.

The Company has the option to extend the lease term for a period of one year .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data