What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-24 compared with 2024-02-26 · 333 added, 349 removed, 670 unchanged (50% of the section changed)

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statement of Mezzanine Equity and Stockholders’ Equity (Deficit)

Consolidated Statements of Operations and Comprehensive Income ( Loss )

Consolidated Statement of Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Hims & Hers Health, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, mezzanine equity and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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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;

(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.

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment indicators for certain trade name intangible assets

As discussed in Note 9 to the consolidated financial statements, the carrying value of the Company’s trade name intangible assets was $17.3 million as of December 31, 2023.

Long-lived assets, including trade name intangible assets, are reviewed for potential impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of an asset may not be recoverable.

We identified the evaluation of triggering events that indicate the carrying amount of certain trade name intangible assets may not be recoverable as a critical audit matter.

Challenging auditor judgment was required to assess the Company’s identification and evaluation of indicators of potential impairment.

Specifically, judgments included the identification and evaluation of potential quantitative and qualitative impairment indicators, including demand for the certain asset group’s products and services, profitability, and other business factors.

Realizability of domestic deferred tax assets

As described in Notes 2 and 18 to the consolidated financial statements, the Company recognized a change in the valuation allowance of $68.0 million during the year ended December 31, 2024 primarily related to a release of its domestic valuation allowance.

The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence to ascertain whether it is more likely than not that deferred tax assets will be realized.

Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain.

Prior to 2024, the Company concluded that a valuation allowance was required against its deferred tax assets.

The Company considers all available positive and negative evidence in its assessment of the recoverability of its deferred tax assets.

During 2024, the Company determined that a valuation allowance against its domestic deferred tax assets was no longer required, primarily due to sustained tax profitability (pre-tax earnings or loss adjusted by permanent book to tax differences), which is objective and verifiable evidence, as well as anticipated future earnings.

As of December 31, 2024, the Company had gross deferred tax assets of $81.4 million.

We identified the evaluation of the realizability of certain domestic deferred tax assets as a critical audit matter.

Subjective auditor judgment was required in evaluating the available positive and negative evidence to determine whether it is more-likely-than-not that certain domestic deferred tax assets will be realized.

The evaluation of the realizability of these domestic deferred tax assets required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control related to the Company’s identification and evaluation of triggering events for long-lived assets, including certain trade name intangible assets.

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 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

• inquiring of Company officials regarding future plans for the certain asset group

• reading board of directors’ meetings minutes to identify other business factors that might impact the evaluation of triggering events.

We evaluated the design and tested the operating effectiveness of internal controls related to the Company’s income tax process.

This included a control related to the Company’s consideration and evaluation of available positive and negative evidence to determine it is more-likely-than-not that sufficient future taxable income will be generated to allow for the realization of certain domestic deferred tax assets.

We involved tax professionals with specialized skills and knowledge who assisted in assessing the appropriateness of the Company’s evaluation of available positive and negative evidence by:

• evaluating historical trends in revenue and tax profitability in assessing the extent of objective and verifiable evidence of the Company’s ability to generate future earnings necessary to realize certain domestic deferred tax assets

• performing a sensitivity analysis over projected revenue for recently launched products to understand the impact to the Company’s assessment of anticipated future earnings

• assessing the presence and composition of cumulative income or loss for the past three years by inspecting tax filings and historical earning

• evaluating the Company’s application of tax regulations pertaining to certain domestic deferred tax assets.

We have served as the Company’s auditor since 2019.

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Operating lease right-of-use assets 10,881 9,588

Deferred tax assets, net 61,603 —

Other long-term assets 147 91

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Operating lease liabilities 9,456 8,667

Earn-out liabilities — 2,975

Other long-term liabilities — 22

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Consolidated Statements of

Operations and Comprehensive Loss

Operations and Comprehensive Income (Loss)

(In Thousands, Except Share and Per Share Data)

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Total operating expenses 1,111,232 744,402 477,419

Loss from operations ( 29,453 ) ( 68,697 ) ( 115,042 )

Income (loss) from operations 61,903 ( 29,453 ) ( 68,697 )

Other income (expense):

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Total other income, net 9,808 7,882 2,988

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

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

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

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

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

Net loss per share attributable to common stockholders:

Basic and diluted $ ( 0.11 ) $ ( 0.32 ) $ ( 0.58 )

Weighted average shares outstanding:

Basic and diluted 209,344,712 204,516,120 186,781,537

Income (loss) before income taxes 71,711 ( 21,571 ) ( 65,709 )

Benefit (provision) for income taxes 54,327 ( 1,975 ) 31

Net income (loss) 126,038 ( 23,546 ) ( 65,678 )

Other comprehensive (loss) income ( 200 ) 153 ( 140 )

Total comprehensive income (loss) $ 125,838 $ ( 23,393 ) $ ( 65,818 )

Net income (loss) per share attributable to common stockholders, Class A and Class V:

Basic $ 0.58 $ ( 0.11 ) $ ( 0.32 )

Diluted $ 0.53 $ ( 0.11 ) $ ( 0.32 )

Weighted average shares outstanding, Class A and Class V:

Basic 215,939,037 209,344,712 204,516,120

Diluted 236,808,876 209,344,712 204,516,120

See accompanying notes to consolidated financial statements.

Hims & Hers Health, Inc.

Consolidated Statements of Mezzanine Equity and Stockholders' Equity (Deficit)

Consolidated Statements of Stockholders' Equity

(In Thousands, Except Share Data)

Redeemable Convertible Preferred Stock Common Stock Additional

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Loss Accumulated

Deficit Total

Stockholders'

Equity (Deficit)

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 )

Pre-closing stock repurchase, net of exercise of vested options ( 206,511 ) ( 125 ) ( 1,817,519 ) — ( 21,902 ) — — ( 21,902 )

Conversion of redeemable convertible preferred stock to common stock ( 93,121,607 ) ( 249,837 ) 93,121,607 9 249,828 — — 249,837

Repayment of related-party promissory notes associated with vested shares — — — — 854 — — 854

Forfeiture of related-party promissory notes — — ( 370,734 ) — — — — —

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

Exercise of Class A common stock warrants — — 1,867,380 — 21,679 — — 21,679

Issuance of common stock upon Merger, net of transaction costs of $ 18.7 million

— — 24,142,244 2 129,657 — — 129,659

Issuance of PIPE shares — — 7,500,000 1 74,999 — — 75,000

Warrant expense in connection with Merger — — — — 154 — — 154

Issuance of Merger earn-out shares to common stockholders — — 14,153,520 1 — — — 1

Issuance of common stock for acquisition of businesses — — 8,699,815 1 52,613 — — 52,614

Exercise of vested stock options — — 1,382,978 1 1,258 — — 1,259

Vesting of early exercised stock options, net of cancelations — — ( 2,812 ) — 227 — — 227

Stock-based compensation — — — — 67,767 — — 67,767

Issuance of common stock upon vesting of RSUs, net of shares withheld for taxes — — 1,189,786 — — — — —

Payments for taxes related to net share settlement of equity awards — — — — ( 5,998 ) — — ( 5,998 )

Issuance of common stock upon Class A common stock warrant redemption — — 1,958,615 — 16,967 — — 16,967

Other comprehensive loss — — — — — ( 126 ) — ( 126 )

Net loss — — — — — — ( 107,659 ) ( 107,659 )

Shares Amount

Balance as of December 31, 2021 204,791,986 $ 20 $ 613,687 $ ( 137 ) $ ( 278,951 ) $ 334,619

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

Issuance of common stock upon vesting of RSUs, net of shares withheld for taxes 4,404,420 — — — — —

Payments for taxes related to net share settlement of equity awards — — ( 52,501 ) — — ( 52,501 )

Exercise of vested stock options 6,734,549 1 26,650 — — 26,651

Exercise of Class A common stock warrants 271,291 — 333 — — 333

Repurchases and retirement of common stock ( 5,768,042 ) — ( 83,039 ) — — ( 83,039 )

Issuance of common stock under employee stock purchase plan 617,563 — 3,901 — — 3,901

Issuance of common stock for acquisition-related earn-out consideration 119,344 — 1,396 — — 1,396

Issuance of common stock for acquisition of business 976,341 — 15,500 — — 15,500

Stock-based compensation — — 94,608 — — 94,608

Other comprehensive loss — — — ( 200 ) — ( 200 )

Net income — — — — 126,038 126,038

Balance as of December 31, 2024 220,837,209 $ 22 $ 719,155 $ ( 324 ) $ ( 242,137 ) $ 476,716

See accompanying notes to consolidated financial statements.

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Operating activities

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

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

Net income (loss) $ 126,038 $ ( 23,546 ) $ ( 65,678 )

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

Depreciation and amortization 17,088 9,515 7,474

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Change in fair value of liabilities — 1,075 ( 70 )

Warrant expense in connection with Merger — — 154

Amortization of debt issuance costs — — 144

Net (accretion) amortization on securities ( 4,355 ) ( 5,686 ) 146

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Purchases of property, equipment, and intangible assets ( 41,655 ) ( 17,220 ) ( 2,714 )

Acquisition of business, net of cash acquired ( 15,399 ) — —

Deferred consideration paid for acquisitions — — ( 459 )

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

Net cash (used in) provided by investing activities ( 19,048 ) ( 12,106 ) 34,699

Financing activities

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

Proceeds from issuance of common stock upon Merger — — 197,686

Proceeds from PIPE — — 75,000

Payments for transaction costs related to securities issuances — — ( 12,851 )

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

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

Proceeds from exercise of vested stock options 26,651 2,322 2,246

Payments for taxes related to net share settlement of equity awards ( 52,501 ) ( 14,096 ) ( 3,901 )

Payments for earn-out consideration for acquisitions — ( 32,650 ) —

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

Repurchases of common stock ( 83,039 ) ( 1,999 ) —

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

Payments for acquisition-related earn-out consideration ( 3,190 ) — ( 32,650 )

Proceeds from employee stock purchase plan 3,901 2,298 1,178

Proceeds from exercise of Class A common stock warrants 333 — —

Net cash used in financing activities ( 107,845 ) ( 11,475 ) ( 33,127 )

Foreign currency effect on cash and cash equivalents ( 270 ) ( 11 ) ( 53 )

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Non-cash investing and financing activities

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

Conversion of redeemable convertible preferred stock to common stock — — 249,837

Assumption of Merger warrants liability — — 51,814

Redemption/exercise of Class A common stock warrants — — 37,834

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 — —

Purchases of property and equipment included in accounts payable and accrued liabilities 7,781 3,383 —

Right-of-use asset obtained in exchange for lease liability 2,593 6,270 1,206

Vesting of early exercised stock options, net of cancelations — 197 227

Common stock issued, contingent consideration, and liabilities assumed in acquisition of businesses — — 99,958

Vesting of early exercised stock options — — 197

Issuance of common stock for acquisition-related earn-out consideration 1,396 — —

Issuance of common stock and liabilities assumed in connection with acquisition of business 16,000 — —

See accompanying notes to consolidated financial statements.

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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 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.

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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.

(“Hims”) pursuant to the Agreement and Plan of Merger dated as of September 30, 2020 (the “Merger Agreement”) by and among OAC, Hims, and Rx Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of OAC (“Merger Sub”).

The Merger Agreement provided for, among other things, the combination of Hims and OAC pursuant to the merger of Merger Sub with and into Hims, with Hims continuing as the surviving entity and as a wholly-owned subsidiary of OAC, which changed its name to Hims & Hers Health, Inc.

(the “Merger”).

The Merger was accounted for as a reverse recapitalization with Hims as the accounting acquirer and OAC as the acquired company for accounting purposes.

Accordingly, all historical financial information presented in the consolidated financial statements represents the accounts of Hims and its wholly-owned subsidiaries as if Hims is the predecessor to the Company.

The share and per share information in these consolidated financial statements has therefore been retroactively restated to reflect the share exchange ratio established in the Merger ( 0.4530 shares of Company Class A common stock for 1 share of Hims Class A common stock).

Prior to the Merger, OAC ordinary shares and warrants were traded on the New York Stock Exchange (“NYSE”) under the ticker symbols “OAC” and “OAC WS”, respectively.

On the Closing Date, the Company’s Class A common stock and warrants began trading on the NYSE under the ticker symbols “HIMS” and “HIMS WS”, respectively.

Upon the completion of the warrant redemption in August 2021, the Company is trading on the NYSE solely under the ticker symbol “HIMS”.

One of the primary purposes of the Merger was to provide a platform for Hims to gain access to the U.S.

capital markets.

See Note 3 – Recapitalization for additional details.

Summary of Significant Accounting Policies

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The accompanying consolidated financial statements have been prepared pursuant to accounting principles generally accepted in the United States of America (“U.S.

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and variable interest entities for which it is the primary beneficiary.

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and variable interest entities in which it is the primary beneficiary.

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

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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.

The more significant estimates, judgments, and assumptions by management include, among others, valuation and recognition of stock-based compensation expense, valuation of contingent consideration in business combinations, purchase price allocation for business combinations, valuation of deferred tax assets, valuation of inventory, and estimates used in the capitalization of website development and internal-use software costs.

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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Risks and Uncertainties

The Company’s business, operations, and financial results are subject to various risks and uncertainties, including adverse United States economic conditions, legal restrictions, changing laws for medical services and prescription products, decisions to outsource or modify portions of its supply chain, and competition in its industry, and of which could adversely affect its business, financial condition, results of operations, and cash flows.

The Company’s business, operations, and financial results are subject to various risks and uncertainties, including adverse United States economic conditions, legal restrictions, changes to the regulatory environment, changing laws for medical services and prescription products, decisions to outsource or modify portions of its supply chain, and competition in its industry, any of which could adversely affect its business, financial condition, results of operations, and cash flows.

These significant factors, among others, could cause the Company’s future results to differ materially from the consolidated financial statements.

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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 the Affiliated and Partner Pharmacies (as defined below).

The prescription products ordered on the Hims & Hers 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 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.

Certain newer offerings on the Hims & Hers platform are primarily manufactured by one supplier.

If this supplier stops fulfilling purchase orders, it could significantly slow the Company’s ability to fulfill these orders until new suppliers are onboarded and internal manufacturing capabilities are expanded.

The Company maintains agreements with suppliers and is continuing to invest in expanding internal manufacturing capabilities to mitigate any such risk.

As of both December 31, 2024 and 2023, four wholesale customers individually represented more than 10% of accounts receivable.

For the years ended December 31, 2024, 2023, and 2022, no single customer represented more than 10% of revenue.

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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 income (loss) on the consolidated statements of operations and comprehensive loss.

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

Business Combinations

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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.

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In connection with determination of fair values, the Company may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations.

Any acquired assets from a business combination including intangible assets subject to amortization are continuously monitored and reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In such cases, recoverability of assets to be held and used is assessed by comparing the carrying amount of assets with their future underlying net undiscounted cash flows without interest charges.

Any acquired assets from a business combination, including intangible assets, are continuously monitored and reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In such cases, recoverability of assets to be held and used is assessed by comparing the carrying amount of assets

with their future underlying net undiscounted cash flows without interest charges.

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.

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The Company is managed as a single operating segment on a consolidated basis, inclusive of acquisitions.

The Company determined that the Chief Executive Officer (“CEO”) is the chief operating decision maker as he is responsible for making decisions regarding the allocation of resources and assessing performance as well as for strategic operational decisions and managing the organization at a consolidated level.

The Company determines its operating segments based on how the chief operating decision maker (“CODM”) makes decisions regarding the allocation of resources and operational strategy, assesses performance, and manages the organization at a consolidated level.

The Chief Executive Officer (“CEO”), is the CODM.

The products and services from which this segment derives its revenues are described below in the discussion of revenue recognition.

Cash, Cash Equivalents, and Restricted Cash

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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 income (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 (loss) income on the consolidated statements of operations and comprehensive income (loss), except for credit losses.

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

The Company records the interest income and realized gains and losses on the sale of these instruments within other income (expense), net on the consolidated statements of operations and comprehensive loss.

Other-Than-Temporary Impairment and Credit Losses

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 Company records the interest income and realized gains and losses on the sale of these instruments within other income, net on the consolidated statements of operations and comprehensive income (loss).

Credit Losses

The Company 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, 2024, 2023, or 2022 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 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.

The Company concluded that an allowance for credit losses for its available-for-sale securities was unnecessary as of December 31, 2024 and 2023 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 were no material realized gains or losses on available-for-sale securities in the periods presented.

Fair Value of Financial Instruments

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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, 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.

As of December 31, 2024 and 2023, gross accounts receivable, comprising wholesale trade and other receivables, net, was $ 6.1 million and $ 6.7 million, respectively.

There were no write-offs of accounts receivable for the years ended December 31, 2024 and 2022.

There were immaterial write-offs of accounts receivable for the year ended December 31, 2023.

As of December 31, 2024 and 2023, the Company had no material allowances for doubtful accounts.

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

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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, equipment, and software are depreciated or amortized using the straight-line method over the estimated useful lives ranging from two to ten 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.

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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 2021 and no goodwill impairment was recorded for the years ended December 31, 2023, 2022, and 2021.

Goodwill of $ 1.8 million was acquired during 2024.

No goodwill impairment was recorded for the years ended December 31, 2024, 2023, and 2022.

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.

Intangible assets, net primarily includes the 503B pharmacy license, 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 operating expenses on the consolidated statements of operations and comprehensive income (loss).

Impairment of Long-Lived Assets

Long-lived assets include property and equipment, website and mobile application development and internal-use software, and intangible assets subject to amortization.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In such cases, recoverability of assets to be held and used is assessed by comparing the carrying amount of assets with their future underlying net undiscounted cash flows without interest charges.

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.

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.

Long-lived assets include property, equipment, and software and intangible assets subject to amortization.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

In such cases, recoverability of asset groups to be held and used is assessed by comparing the carrying amount of the asset group with its future underlying net undiscounted cash flows without interest charges.

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

The Company recognized immaterial impairment charges on long-lived assets during each of the years ended December 31, 2024 and 2023 and $ 1.1 million of impairment charges on long-lived assets during the year ended December 31, 2022.

These charges are included in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

As a result of the continued integration of YoDerm, Inc.

(“Apostrophe”) since the acquisition, the Company concluded it was a single asset group as of January 1, 2024.

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 facilities for fulfillment and corporate purposes under non-cancelable operating leases with expiration dates between 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 2030, not including renewal options the Company is reasonably certain to exercise.

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.

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The operating lease ROU assets and lease liabilities are recognized at each lease’s inception date based on the present value of lease payments over the lease term discounted based on the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate, which is the estimated rate the Company would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease.

Because the Company’s operating leases do not provide an implicit rate, the Company estimates its incremental borrowing rate at the lease commencement date for borrowings with a similar term.

Company’s operating leases do not provide an implicit rate, the Company estimates its incremental borrowing rate at the lease commencement date for borrowings with a similar term.

The Company’s operating lease ROU assets are measured based on the corresponding operating lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred, and (iii) tenant incentives under the lease.

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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.

The Company’s 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 or customer warehouse.

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 wholesale 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.

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The stand-alone selling price is based on the prices at which the Company separately sells the products and services, as well as market and cost plus estimates.

For each of the years ended December 31, 2023, 2022, and 2021, service revenue represented less than 10% of consolidated revenues.

For each of the years ended December 31, 2024, 2023, and 2022, service revenue, comprising consultation services and post-consultation service support, represented less than 10% of consolidated revenues.

To fulfill its promise to customers for contracts that include professional medical consultations, the Company maintains relationships with various “Affiliated Medical Groups,” which are professional corporations or other professional entities owned by licensed physicians and that engage licensed healthcare professionals (physicians, physician assistants, nurse practitioners, and mental health providers;

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and (iv) the Company, in its sole discretion, sets all listed prices charged on its websites and mobile applications for products and services.

Additionally, to fulfill its promise to customers for contracts that include sale of prescription products, the Company maintains relationships with (i) certain third-party pharmacies (“Partner Pharmacies” or individually, a “Partner Pharmacy”) and (ii) XeCare, LLC (“XeCare”) and Apostrophe Pharmacy LLC (“Apostrophe Pharmacy”, and together with XeCare, the “Affiliated Pharmacies”), which are licensed mail order pharmacies providing prescription fulfillment solely to the Company’s customers.

The Partner Pharmacies and the Affiliated Pharmacies fill prescription orders for customers who have received a prescription from a prescribing Provider through the Company’s websites and mobile applications.

Additionally, to fulfill its promise to customers for contracts that include sale of prescription products, the Company maintains relationships with (i) certain third-party pharmacies (“Partner Pharmacies” or individually, a “Partner Pharmacy”), (ii) XeCare, LLC (“XeCare”) and Apostrophe Pharmacy LLC (“Apostrophe Pharmacy”, and together with XeCare, the “Affiliated Pharmacies”), which are licensed mail order pharmacies providing prescription fulfillment solely to the Company’s customers;

and (iii) Seaview Enterprises LLC (d/b/a MedisourceRx) (“MedisourceRx”), which is a wholly-owned licensed 503B compounding outsourcing facility.

MedisourceRx manufactures products primarily for the Company’s customers, and the pharmacies, as licensed, fill prescription orders for customers who have received a prescription from a prescribing Provider through the Company’s websites and mobile applications.

The Company accounts for prescription product revenue as a principal in the arrangement with its customers.

This conclusion is reached because (i) the Company has sole discretion in determining which Partner Pharmacy or Affiliated Pharmacy fills a customer’s prescription;

(ii) Partner Pharmacies and Affiliated Pharmacies fill the prescription based on fulfillment instructions provided by the Company, including using the Company’s branded packaging for generic products;

This conclusion is reached because (i) the Company has sole discretion in determining which pharmacy fills a customer’s prescription;

(ii) the pharmacies fill the prescription based on fulfillment instructions provided by the Company, including using the Company’s branded packaging for generic products;

(iii) the Company is primarily responsible to the customer for the satisfactory fulfillment and acceptability of the order;

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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 in accordance with contract terms, with the exception of prepaid offerings for which payment is collected upfront with subsequent shipments typically occurring quarterly.

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

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.

As of December 31, 2024 and 2023, total deferred revenue was $ 75.3 million and $ 7.7 million, respectively.

The increase of $ 67.6 million was primarily due to the impact of newer offerings introduced during 2024 along with an increase in the uptake by customers of prepaid offerings.

Cost of Revenue

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, equipment, and software are considered to be operating expenses and are excluded from cost of revenue.

Cost of revenue consists of costs directly attributable to the products shipped and services rendered, including product costs of purchased and manufactured products, packaging materials, shipping costs, labor costs directly related to revenue generating activities including medical consultation services and manufacturing labor, and overhead costs associated with manufactured products.

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 (other than related to manufactured products) are considered to be operating expenses and are excluded from cost of revenue.

Stock-Based Compensation

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The Company recognizes compensation costs on a straight-line basis over the requisite service period of the employee and vendor, which is generally the vesting term of four years for options, warrants, and RSUs that do not have performance or market conditions.

Stock options and RSUs with performance conditions are recognized when it is probable that performance criteria will be achieved and compensation cost is recognized using the accelerated attribution method.

Stock options with performance conditions are recognized when it is probable that performance criteria will be achieved and compensation cost is recognized using the accelerated attribution method.

PRSUs are recognized based on the probable level of achievement against the performance criteria.

The Company accounts for forfeitures as they occur.

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The ability to purchase shares of the Company’s Class A common stock for a discount represents an option and, therefore, the ESPP is considered a compensatory plan.

Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the requisite service period, which is the withholding period.

Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the BSM option-pricing model and is recognized over the requisite service period, which is the withholding period.

The Company accounts for income taxes using the asset and liability method.

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The Company considers both positive and negative evidence, including its historical operating results, forecasts of future taxable income on a jurisdiction-by-jurisdiction basis, and ongoing tax planning strategies, to ascertain the need for a valuation allowance.

In the event the Company determines that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, it would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.

If and when the Company concludes that it is more likely than not to utilize some or all of its deferred tax assets, the Company releases some or all of its valuation allowance and its tax provision will decrease in the period in which the Company makes such determination, which will cause a corresponding one-time increase to net income.

The Company accounts for uncertain tax positions in accordance with the relevant guidance, which prescribes a two-step approach to recognize and measure uncertain tax positions taken or expected to be taken in the income tax return.

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The Company recognized matching contributions cost of $ 2.9 million, $ 2.0 million, and $ 1.2 million for the years ended December 31, 2024, 2023, and 2022, 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.

Customer acquisition expenses are charged to expense as incurred and recorded within marketing expense on the consolidated statements of operations and comprehensive loss.

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

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.

For the years ended December 31, 2024, 2023, and 2022, advertising costs for customer acquisition and content production were $ 604.6 million, $ 390.3 million, and $ 235.6 million, respectively, consisting primarily of customer acquisition expenses (comprising advertising and media costs associated with the Company’s efforts to acquire new customers, promote its brands, and build awareness for its products and services, including advertising in digital media, social media, television, radio, out-of-home media, and various other media outlets and excluding content production costs) of $ 594.5 million, $ 379.7 million, and $ 230.4 million, respectively, which are charged to expense as incurred and recorded within marketing expense on the consolidated statements of operations and comprehensive income (loss).

The Company defers production costs associated with advertising campaigns until the airing of those campaigns.

Other Comprehensive (Loss) Income

The Company’s other comprehensive (loss) income is primarily 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, facility equipment, other assets, accounts payable and accrued liabilities, and long-term liabilities.

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

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.

The Company believes that its existing cash and investment balances are sufficient for the Company to meet its obligations through at least one year from the date of issuance of the consolidated financial statements.

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

During the year ended December 31, 2024, the Company had positive cash flows from operating activities of $ 251.1 million and generated net income of $ 126.0 million.

As of December 31, 2024, the Company had cash and cash equivalents of $ 220.6 million, short-term investments of $ 79.7 million, and an accumulated deficit of $ 242.1 million.

The Company believes that its existing cash resources, together with its availability under the Revolving Credit Facility (for more detail regarding the Revolving Credit Facility, see Note 19 – Subsequent Events), are sufficient for the Company to meet its obligations through at least one year from the date of issuance of the consolidated financial statements.

Management considers that there are no conditions or events in the aggregate that raise substantial doubt about the entity’s ability to continue as a going concern for a period of at least one year from the date the consolidated financial statements are issued.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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.

The amendments in this ASU 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.

The Company adopted the ASU for the year ended December 31, 2024 using the retrospective approach.

As a result of the adoption, the Company began including expanded segment disclosures related to operating expenses within Note 17 – Segments.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

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.

The amendments in this ASU 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 in this ASU 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 ASU on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The amendments in this Update expand certain expense category disclosure requirements, primarily though enhanced disclosures about inventory purchases,

employee compensation, depreciation, amortization, and selling expenses.

ASU 2024-03 is effective for all public entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, 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

As discussed in Note 1 – Organization, on the Closing Date, OAC completed the acquisition of Hims and acquired 100 % of Hims’ shares and Hims received gross proceeds of $ 197.7 million.

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).

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 .

As additional consideration, OAC also granted 888,143 OAC Class A common stock warrants (“Parent Warrants”) to Hims’ stockholders, 3,443 Parent Warrants to warrant holders, and approximately 35,000 RSUs to Hims’ option and RSU holders (“Parent Warrant RSUs”).

All equity awards of Hims were assumed by OAC and converted into comparable equity awards that are settled or exercisable for shares of the Company’s Class A common stock.

As a result, each stock option was converted into an option to purchase shares of the Company’s Class A common stock based on an exchange ratio of 0.4530 .

Each award of the Hims’ RSUs was converted into RSUs of the Company based on an exchange ratio of 0.4530 .

Similarly, all outstanding Hims warrants were converted at an exchange ratio of 0.4530 .

The Merger was accounted for as a reverse recapitalization with Hims as the accounting acquirer and OAC as the acquired company for accounting purposes.

Hims was determined to be the accounting acquirer since Hims’ shareholders prior to the Merger had the greatest voting interest in the combined entity, Hims’ shareholders appointed the initial directors of the combined Board of Directors and control future appointments, Hims comprises all of the ongoing operations, and Hims’ senior management directs operations of the combined entity.

Accordingly, all historical financial information presented in these consolidated financial statements represents the accounts of Hims and its wholly-owned subsidiaries as if Hims, rather than OAC, is the predecessor to the Company.

No step-up basis of intangible assets or goodwill was recorded and net assets were stated at historical cost consistent with the treatment of the transaction as a reverse recapitalization of Hims.

The shares and net loss per common share prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger ( 0.4530 Company shares for 1 Hims share).

Merger Earn-Out Shares

Following the closing of the Merger, holders of Hims’ common stock and outstanding equity awards (including warrant, stock option and RSU holders) had the right to receive up to an aggregate amount of 16,000,000 shares of Company Class A common stock (or equivalent equity award) that would vest (in part) in equal thirds if the trading price of the Company’s Class A common stock was greater than or equal to $ 15.00 , $ 17.50 , and $ 20.00 for any 10 trading days within any 20 -trading day period on or prior to the date that is five years following the Closing Date.

These shares of restricted Class A common stock and equivalent equity awards would also vest in connection with an acquisition of the Company if the applicable thresholds were met in any sale (as defined in the Merger Agreement) but subject to the same five-year deadline.

In February 2021, all earn-out thresholds were met.

In the first quarter of 2021, earn-out awards related to option holders received final approval by the Board of Directors.

The earn-out shares are equity classified since they do not meet the liability classification criteria outlined in ASC 480, Distinguishing Liabilities from Equity and are both (i) indexed to the Company’s own shares and (ii) meet the criteria for equity classification.

PIPE Investment

Concurrently with the execution of the Merger Agreement, OAC entered into subscription agreements on September 30, 2020 with certain investors (the “PIPE Investors”) pursuant to which such investors collectively subscribed for 7,500,000 shares of the Company’s Class A common stock at $ 10.00 per share for aggregate gross proceeds of $ 75.0 million (the “PIPE Investment”).

The PIPE Investment was consummated substantially concurrently with the closing of the Merger.

The Company completed two acquisitions in 2021 and accounted for these transactions using the acquisition method with the purchase prices being allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition dates.

Fair values were determined using income approaches.

Honest Health Limited

In June 2021, the Company acquired all of the outstanding equity of Honest Health Limited, which is now Hims & Hers UK Limited (“HHL”), an entity located in the United Kingdom that offers health and wellness products and services, to further expand its operations in the United Kingdom.

The purchase price for accounting purposes was $ 4.8 million, including cash paid upfront and payable in the future, an aggregate of 624,880 shares of the Company’s Class A common stock valued at $ 1.9 million, and contingent consideration of $ 1.2 million.

The purchase agreement includes up to $ 10.0 million of potential earn-out payable in cash and stock upon achievement of revenue targets, which is recognized as contingent consideration as well as post-acquisition employment expense.

The purchase price for accounting purposes excludes stock and cash consideration to be paid by the Company that is subject to vesting, which is recognized as selling, general, and administrative expenses post-acquisition.

See Note 15 – Stockholders’ Equity for additional details.

The Company also incurred acquisition costs of $ 1.9 million directly related to the acquisition, as well as post-acquisition employment expense of $ 0.7 million, which were recorded within selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss.

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

In September 2024, the Company satisfied all closing conditions of the executed purchase agreement to acquire all of the membership interests of MedisourceRx, a 503B compounding outsourcing facility registered with the Food and Drug Administration and located in the United States.

The purchase price for accounting purposes was $ 31.0 million, including cash payments of $ 15.5 million and 976,341 shares of Class A common stock valued at $ 15.5 million.

The Class A common stock is not subject to any vesting terms.

The Company also incurred acquisition costs of $ 1.4 million directly related to the acquisition which were recorded within general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

The acquisition was accounted for as a business combination under the acquisition method with the purchase price being allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date.

The fair value of the 503B pharmacy license was determined using the income approach.

The following table summarizes the acquisition date fair values of assets acquired and liabilities assumed (in thousands):

Trade name $ 1,470

Other intangible assets 570

503B pharmacy license $ 28,596

Goodwill 1,847

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Net assets acquired $ 31,000

The excess of the consideration paid over the fair value of the net assets acquired is recorded as goodwill.

The acquired goodwill of $ 2.7 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships.

The goodwill recognized upon acquisition is no t expected to be deductible for U.S.

income tax purposes.

The pro forma financial information, assuming the acquisition had taken place on January 1, 2021, as well as the revenue and earnings generated during the period after the acquisition date, were not material for separate disclosure and, accordingly, have not been presented.

In July 2021, the Company acquired all of the outstanding equity of YoDerm, Inc.

(“Apostrophe”) , an entity located in the United States that offers health and wellness products and services.

The purchase price for accounting purposes was $ 131.6 million, including cash payments of $ 48.2 million, an aggregate of 8,074,935 shares of the Company’s Class A common stock valued at $ 50.7 million, and contingent consideration of $ 32.7 million.

The purchase agreement includes up to $ 50.0 million of potential earn-out payable in cash upon achievement of revenue targets, which is recognized as contingent consideration or post-acquisition employment expense depending on whether the vesting is contingent on continued employment beyond the acquisition date.

The purchase price for accounting purposes excludes stock consideration issued by the Company that is subject to vesting, which is recognized as selling, general, and administrative expenses post-acquisition.

See Note 15 – Stockholders’ Equity for additional details .

The Company also incurred acquisition costs of $ 5.0 million directly related to the acquisition, as well as

post-acquisition employment expense of $ 0.5 million, which were recorded within selling, general, and administrative expenses on the consolidated statements of operations and comprehensive loss.

The following table summarizes the acquisition date fair values of assets acquired and liabilities assumed (in thousands):

Trade name $ 22,700

Other intangible assets 3,140

Goodwill 108,142

Other net liabilities ( 2,346 )

Net assets acquired $ 131,636

The fair value measurements of the identified intangible assets were based primarily on significant unobservable inputs and thus represent a Level 3 measurement as defined in ASC 820.

The fair values of trade name and developed technology were determined using the relief-from-royalty method under the income approach.

This involves forecasting avoided royalties, reducing them by taxes, and discounting the resulting net cash flows to a present value using an appropriate discount rate.

Judgment was applied for a number of assumptions in valuing the identified intangible assets including revenue and cash flow forecasts, customer churn rate, technology life, royalty rate, and discount rate.

The fair value of customer relationships was determined using the multi-period excess earnings method which involves forecasting the net earnings expected to be generated by the asset, reducing them by appropriate returns on contributory assets, and then discounting the resulting net cash flows to a present value using an appropriate discount rate.

Amortization expense related to the 503B pharmacy license is recognized on a straight-line basis over the useful life of ten years , within operations and support expense on the consolidated statements of operations and comprehensive income (loss).

The excess of the consideration paid over the fair value of the net assets acquired is recorded as goodwill.

The acquired goodwill of $ 108.1 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships.

The goodwill recognized upon acquisition is no t expected to be deductible for U.S.

The acquired goodwill of $ 1.8 million represents future economic benefits expected to arise from synergies from combining operations resulting in increased market presence of compounding capabilities and advanced expertise of compounding operations.

The $ 1.8 million of goodwill recognized upon acquisition is expected to be deductible for U.S.

income tax purposes.

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, 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.

Pro forma earnings of Apostrophe, assuming the acquisition had occurred as of January 1, 2021, as well as earnings generated during the period after the acquisition date, were not material for separate disclosure and, accordingly, have not been presented.

The acquisition did not have a material impact on the Company’s revenue or earnings generated during the period after the acquisition date, and historical and pro forma disclosures have therefore not been presented.

Short-term investments as of December 31, 2024, consist of the following (in thousands):

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Government and government agency 1,446 1 — 1,447

Asset-backed bonds 705 1 — 706

Total short-term investments $ 79,544 $ 124 $ ( 1 ) $ 79,667

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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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Prepaid expenses and other current assets consist of the following (in thousands):

Wholesale trade receivables $ 5,705 $ 3,231

Prepaid expenses $ 16,172 $ 10,665

Wholesale trade and other receivables, net 6,080 6,748

Other current assets 8,901 4,195

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Depreciation and amortization expense for property, equipment, and software was $ 13.3 million, $ 6.0 million, and $ 3.4 million for the years ended December 31, 2024, 2023, and 2022, 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.

Impairment expense for property, equipment, and software was immaterial for each of the years ended December 31, 2024, 2023, and 2022.

Intangible Assets, Net

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Value Weighted

503B pharmacy license $ 28,596 $ ( 953 ) $ 27,643 9.7

Trade name 24,170 ( 9,256 ) 14,914 6.5

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

Amount Accumulated

Amortization Net

Amount Accumulated Amortization and Impairment Net

Value Weighted

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Professional services 8,463 5,341

Tax 2,009 963

Product and shipping 562 263

Other accruals 10,644 3,412

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Operating Leases

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

The Company has various operating leases for fulfillment and corporate facilities with lease periods expiring between fiscal years 2025 and 2030, not including renewal options the Company is reasonably certain to exercise.

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.

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.

During the year ended December 31, 2024, a reassessment was triggered due to signing a lease for a new facility which is in close proximity to and also acts as an operational expansion of an existing facility, as well as investment in leasehold improvements in the existing facility.

This resulted in the remeasurement of the lease liability and an adjustment of $ 0.9 million to the carrying amount of the corresponding ROU asset for the existing facility.

During the year ended December 31, 2023, a reassessment of another of the Company’s leased facilities was triggered due to significant leasehold improvements.

This 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, 2024, 2023, and 2022, the Company recorded operating lease costs of $ 3.0 million, $ 2.4 million, and $ 1.9 million, respectively, including variable operating lease costs of $ 0.5 million, $ 0.4 million, and $ 0.3 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, operating cash flows used for operating leases were $ 2.4 million, $ 1.9 million, and $ 1.6 million, respectively.

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The results of operations and cash flows of the VIEs are also included in the Company’s consolidated financial statements.

As of December 31, 2023 and 2022, the Company’s consolidated balance sheets included current assets of $ 24.1 million and $ 7.5 million, respectively, and total assets of $ 24.1 million and $ 7.7 million, respectively, for the VIEs.

As of December 31, 2024 and 2023, the Company’s consolidated balance sheets included current and total assets of $ 56.1 million and $ 24.1 million, respectively, for the VIEs.

As of December 31, 2024 and 2023, current and total liabilities were $ 16.6 million and $ 6.0 million, respectively.

All amounts are after elimination of intercompany transactions, balances, and non-cash impact of operating leases.

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, 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.

For the years ended December 31, 2024, 2023, and 2022, the VIEs charged $ 216.7 million, $ 96.3 million, and $ 64.2 million, respectively, for services rendered.

For the years ended December 31, 2024, 2023, and 2022 operations of the VIEs generated a net loss of $ 26.2 million and net income of $ 3.3 million and $ 9.1 million, respectively, inclusive of administrative expenses.

Fair Value Measurements

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Government and government agency — 1,447 — 1,447

Asset-backed bonds — 706 — 706

Restricted cash:

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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 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, 2024 and 2023, due to their short-term nature.

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.

All other financial instruments 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, 2024, 2023, and 2022, 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, 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:

Revenue risk-adjusted discount rate 9.1 %

Revenue volatility 50.0 %

Counterparty discount rate 5.0 %

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

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

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 $ —

Commitments and Contingencies

Purchase Obligations

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.

The Company has non-cancelable contractual obligations with remaining terms in excess of one year to make future purchases, primarily related to cloud-based software contracts used in operations.

As of December 31, 2024, non-cancelable purchase obligations with remaining terms in excess of one year were $ 22.0 million, with $ 7.1 million payable in 2025, $ 7.5 million payable in 2026, $ 7.2 million payable in 2027, and $ 0.1 million payable in each of 2028 and 2029.

Lease Commitments

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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.

On October 26, 2023, the Board of Directors authorized and approved a share repurchase program (the “2023 Share Repurchase Program”) pursuant to which the Company was authorized to repurchase up to $ 50.0 million of the Company’s Class A common stock.

During the years ended December 31, 2024 and 2023, the Company repurchased and retired 3,632,123 and 237,458 , respectively, shares of Class A common stock under the 2023 Share Repurchase Program for $ 48.0 million and $ 2.0 million, respectively.

As of December 31, 2024, the entire $ 50.0 million originally available under the 2023 Share Repurchase Program has been utilized.

On July 24, 2024, the Board of Directors authorized and approved a new share repurchase program (the “2024 Share Repurchase Program”) pursuant to which the Company may repurchase up to $ 100.0 million of the Company’s Class A common stock.

The 2024 Share Repurchase Program expires on August 31, 2027.

The Company intends to use the 2024 Share Repurchase 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.

The 2024 Share Repurchase Program may be suspended or discontinued at any time.

During the year ended December 31, 2024, the Company repurchased and retired 2,135,919 shares of Class A common stock under the 2024 Share Repurchase program for $ 35.0 million.

As of December 31, 2024, $ 65.0 million remains available under the 2024 Share Repurchase program.

During the years ended December 31, 2024, 2023, and 2022, the Company released 6,829,961 , 5,201,501 , and 2,333,695 gross shares of Class A common stock, respectively, upon vesting of RSUs.

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2017 Stock Plan and 2020 Equity Incentive Plan

In July 2017, Hims adopted the 2017 Stock Plan (the “2017 Plan”).

In July 2017, Hims, Inc.

(“Hims”) adopted the 2017 Stock Plan (the “2017 Plan”).

Under the 2017 Plan, the board of directors of Hims granted awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSU awards, and other stock awards to employees, directors, and consultants of Hims.

In January 2021, in connection with the Merger, the Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”) and reserved 21,000,000 authorized shares of Class A common stock the Company could issue.

In January 2021, the Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”) and reserved 21,000,000 authorized shares of Class A common stock the Company could issue.

In addition, up to 19,000,000 shares of Hims Class A common stock subject to awards granted under the 2017 Plan that were forfeited, expired, or lapsed unexercised or unsettled could be added to the 2020 Plan reserve.

Beginning on January 1, 2022 and ending on January 1, 2031, the number of authorized shares of common stock under the 2020 Plan will automatically increase each fiscal year by 5 % of the total number of Class A and Class V common stock issued and outstanding on the last day of the preceding fiscal year unless the Board of Directors approves a lesser number.

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

Directors approves a lesser number.

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

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Therefore, as of December 31, 2024, 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.

During the years ended December 31, 2024, 2023, and 2022, the Company issued 617,563 , 594,885 , and 393,528 shares, respectively, of Class A common stock under the ESPP.

As of December 31, 2024, there were 4,441,943 shares of Class A common stock available for issuance under the ESPP.

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Stock Options

Options for new employees generally vest over four years , with 25 % vesting one year after the vesting commencement date and then 1/48th of the total grant vesting monthly thereafter.

Options granted to current employees generally vest 1/48th of the total grant monthly over four years .

The Company has historically granted stock options prior to 2024, which for new employees generally vest over four years , with 25 % vesting one year after the vesting commencement date and then 1/48th of the total grant vesting monthly thereafter.

Options granted to existing employees generally vest 1/48th of the total grant monthly over four years .

Options granted are exercisable within a period not exceeding ten years from the grant date.

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As of December 31, 2024, 3,059,124 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.

As of December 31, 2024, all stock-based compensation expense for the awards have been recognized.

On February 24, 2022, the Board of Directors granted 2,085,640 stock options to the CEO with an exercise price of $ 5.01 that vest in four equal tranches.

On each anniversary date after February 24, 2022, 25 % of the shares subject to the options will vest provided that (i) the CEO is employed on the anniversary date and (ii) the closing price of the Company’s Class A common stock is more than $ 10 per share in 20 of the 30 trading days prior to the anniversary date.

On each anniversary date after February 24, 2022, 25 % of the shares subject to the options will vest

provided that (i) the CEO is employed on the anniversary date and (ii) the closing price of the Company’s Class A common stock is more than $ 10 per share in 20 of the 30 trading days prior to the anniversary date.

The award is not subject to any other service condition.

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As of December 31, 2024, no shares have vested and there was $ 0.4 million of remaining compensation expense to be recognized over a period of 1.15 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:

There were no stock options granted during the year ended December 31, 2024.

The grant date fair value of the Company’s stock options granted during the years ended December 31, 2023 and 2022 (excluding the stock options granted to the CEO outlined above) was estimated using the following weighted average assumptions:

Year Ended December 31,

2023 2022 2021

Expected term (in years) 6.02 6.02

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Outstanding at December 31, 2023 13,784 $ 5.14 7.14 $ 57,972

Granted 603 11.53

Exercised ( 4,002 ) 5.06

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Exercisable as of December 31, 2024 7,566 4.79 6.04 146,698

The weighted average grant date fair value of options granted for the years ended December 31, 2023, 2022, and 2021 was $ 6.09 , $ 2.44 , and $ 6.51 per share, respectively, and the intrinsic value of vested options exercised was $ 6.2 million, $ 6.3 million, and $ 12.6 million, respectively.

The weighted average grant date fair value of options granted for the years ended December 31, 2023 and 2022 was $ 6.09 and $ 2.44 per share, respectively.

The intrinsic value of vested options exercised for the years ended December 31, 2024, 2023, and 2022 was $ 58.5 million, $ 6.2 million, and $ 6.3 million, respectively.

As of December 31, 2024, there was $ 6.6 million of unrecognized stock-based compensation related to unvested stock options (excluding the stock options granted to the CEO outlined above) which is expected to be recognized over a weighted average period of 1.42 years.

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Unvested at December 31, 2024 15,757 $ 11.45

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, 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.

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 issued in June 2020, of which 317,539 earn-out RSUs and 6,319 Parent Warrant RSUs have vested as of December 31, 2024.

As of December 31, 2024, there was $ 169.0 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 2.85 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.

On March 1, 2023, the Board of Directors granted awards of 1,115,709 target shares of performance RSUs (“PRSUs”) to certain executive officers.

As of December 31, 2024, 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 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 revenue and Adjusted EBITDA 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.

On February 28, 2024, the Board of Directors granted awards of 1,218,467 target shares of PRSUs to certain executive officers and senior leadership, none of which have been forfeited as of December 31, 2024.

The total grant date fair value of the awards was $ 16.2 million, which was based on the probable achievement of 100 % of the target.

On November 6, 2024, the Board of Directors granted awards of 16,778 target shares of PRSUs to certain senior leadership, with the same vesting terms as the PRSUs granted on February 28, 2024, none of which have been forfeited as of December 31, 2024.

The total grant date fair value of the awards was $ 0.4 million, which was based on the probable achievement of 100 % of the target.

As of December 31, 2024, there was unrecognized stock-based compensation expense related to unvested PRSUs of $ 25.2 million, which is expected to be recognized over a weighted average period of 1.81 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.

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

The Company has historical Class A common stock warrants issued to nonemployees in connection with vendor service arrangements.

As of December 31, 2024, there were 271,962 of these warrants outstanding and exercisable, with a weighted average exercise price of $ 1.75 , a weighted average contractual term of 7.01 years, and an aggregate intrinsic value of $ 6.1 million.

Upon the exercise of outstanding warrants, vendors also have the right to receive 26,603 shares of Class A common stock.

During the year ended December 31, 2024, one of the holders exercised 190,373 of their outstanding warrants at a weighted average exercise price of $ 1.75 .

Upon the exercise of these warrants, the holder received an additional 18,622 shares of Class A common stock based on the terms of the earn-out arrangement.

As of December 31, 2024, all stock-based compensation expense related to vendor warrants and associated earn-out shares has been recognized.

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.

During the year ended December 31, 2024, all of the 98,723 outstanding Class A common stock warrants issued in connection with a historical debt arrangement, with a weighted average exercise price of $ 6.96 , were net exercised for 52,639 shares of

Class A common stock.

Upon the exercise of these warrants, the holders received an additional 9,657 shares of Class A common stock based on the terms of the earn-out arrangement.

These debt warrants were previously 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

In June 2021, the Company granted 447,553 restricted shares of Class A common stock subject to vesting with an aggregate grant date fair value of $ 5.5 million in connection with the acquisition of HHL.

As part of the acquisition of HHL, the Company also recognized an earn-out liability based on the achievement of certain revenue targets.

A portion of the earn-out liability is expected to be settled in shares of Class A common stock.

Vesting of the restricted shares and a portion of total earn-out payable to specific individuals are contingent on each recipient’s continued employment.

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As of December 31, 2024, there was unrecognized stock-based compensation expense of $ 0.6 million, which will be recognized over a weighted average period of 0.44 years.

During the year ended December 31, 2024, the Company settled its earn-out payable, a portion of which was settled through the issuance of 119,344 shares of Class A common stock.

In July 2021, the Company granted 2,332,557 restricted shares of Class A common stock subject to vesting with an aggregate grant date fair value of $ 24.2 million in connection with the acquisition of Apostrophe.

Vesting of the restricted shares is contingent on each recipient’s continued employment.

Vesting of the restricted shares was contingent on each recipient’s continued employment.

Accordingly, the Company has recognized stock-based compensation expense related to these awards for the years ended December 31, 2024, 2023, and 2022.

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.

The expense was 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, 2024, all stock-based compensation expense for these restricted shares has been recognized.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense for employees and nonemployees, by category, on the consolidated statements of operations and comprehensive loss for the years ended December 31, 2023, 2022, and 2021 (in thousands):

The following table summarizes stock-based compensation expense for employees and nonemployees, by category, on the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2024, 2023, and 2022 (in thousands):

Year Ended December 31,

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Related-Party Transactions

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

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

For the years ended December 31, 2024, 2023, and 2022, the Company recorded $ 4.1 million, $ 2.1 million, and $ 1.0 million, respectively, within operating expenses on the consolidated statements of operations and comprehensive income (loss) for payments made to Woolly Labs, Inc.

(d/b/a Vouched), a related-party company that provides identity verification services.

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

As of January 1, 2024, Terminal, Inc.

was no longer considered a related party.

Basic and Diluted Net Income (Loss) per Share

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

No dividends were declared or paid for the years ended December 31, 2024, 2023, and 2022.

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):

The Company’s basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average shares of common stock outstanding during period.

The Company’s diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average shares of common stock outstanding and, when dilutive, potential common shares outstanding during the period.

The dilutive effect of potential common shares is reflected in diluted net income (loss) per share by application of the treasury stock method.

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

Year Ended December 31,

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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 )

Weighted average shares outstanding, basic and diluted 200,967,089 8,377,623 196,138,497 8,377,623 178,840,009 7,941,528

Basic and diluted net loss per share $ ( 0.11 ) $ ( 0.11 ) $ ( 0.32 ) $ ( 0.32 ) $ ( 0.58 ) $ ( 0.58 )

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.

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:

Net income (loss) attributable to common stockholders, basic $ 121,148 $ 4,890 $ ( 22,604 ) $ ( 942 ) $ ( 62,988 ) $ ( 2,690 )

Reallocation of undistributed earnings 431 ( 431 ) — — — —

Net income (loss) attributable to common stockholders, diluted 121,579 4,459 ( 22,604 ) ( 942 ) ( 62,988 ) ( 2,690 )

Weighted average shares outstanding, basic 207,561,414 8,377,623 200,967,089 8,377,623 196,138,497 8,377,623

Effect of dilutive potential common shares 20,869,839 — — — — —

Weighted average shares outstanding, diluted 228,431,253 8,377,623 200,967,089 8,377,623 196,138,497 8,377,623

Basic net income (loss) per share $ 0.58 $ 0.58 $ ( 0.11 ) $ ( 0.11 ) $ ( 0.32 ) $ ( 0.32 )

Diluted net income (loss) per share $ 0.53 $ 0.53 $ ( 0.11 ) $ ( 0.11 ) $ ( 0.32 ) $ ( 0.32 )

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

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

Year Ended December 31,

2024 2023 2022

Stock options 21,278,043 20,470,391 16,345,661

RSUs 360,601 15,220,986 8,778,890

Stock options 156,558 21,278,043 20,470,391

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

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

Redeemable convertible preferred stock — — 4,858,176

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

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

There were no Class V securities that were excluded in the computation of diluted net income (loss) per share for the periods presented.

The CODM utilizes net income (loss) as the measure of segment profit or loss.

The CODM uses net income (loss) to evaluate return on assets and decide whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions.

In addition to the consolidated statements of operations and comprehensive income (loss), the CODM is regularly provided with financial information that includes the following captions when assessing the performance and allocation of resources:

cost of revenue, customer acquisition costs (comprising advertising and media costs associated with the Company’s efforts to acquire new customers, promote its brands, and build awareness for its products and services, including advertising in digital media, social media, television, radio, out-of-home media, and various other media outlets and excluding content production costs), employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) by operating expense caption, and stock-based compensation by operating expense caption.

These are significant segment expenses, as they are regularly provided to the CODM.

The table below highlights the segment’s revenue, expenses, and net income (loss) for the years ended December 31, 2024, 2023, and 2022:

Year Ended December 31,

2024 2023 2022

Revenue $ 1,476,514 $ 872,000 $ 526,916

Cost of revenue 303,379 157,051 118,194

Customer acquisition costs 594,479 379,673 230,381

Employee compensation included within:

Marketing 35,672 26,530 16,503

Operations and support 73,239 48,192 25,478

Technology and development 39,565 24,322 14,750

General and administrative 48,189 40,990 27,063

Stock-based compensation included within:

Marketing 9,392 5,477 4,648

Operations and support 10,205 6,815 2,684

Technology and development 12,534 7,126 4,327

General and administrative 60,191 46,662 31,158

Depreciation and amortization expense included within operating expenses 15,350 9,515 7,474

Interest income ( 10,349 ) ( 9,029 ) ( 2,610 )

Income tax (benefit) expense ( 54,327 ) 1,975 ( 31 )

Other segment items* 212,957 150,247 112,575

Segment net income (loss) 126,038 ( 23,546 ) ( 65,678 )

Reconciliation of profit or loss

Adjustments and reconciling items — — —

Consolidated net income (loss) $ 126,038 $ ( 23,546 ) $ ( 65,678 )

______________

(*) Other segment items included in segment net income (loss) primarily consist of professional services, fulfillment, transaction processing, selling, technology, and other general operating costs.

In addition to the segment’s operating results, the CODM is regularly provided with total assets as reported on the Company’s consolidated balance sheets as well as the expenditures for both purchases of property, equipment, and intangible assets, and investment in website and mobile application development and internal-use software, which are reported on the Company’s consolidated statements of cash flows and totaled $ 52.8 million, $ 26.5 million, and $ 7.2 million during the years ended December 31, 2024, 2023, and 2022, respectively.

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

Year Ended December 31,

2024 2023 2022

Domestic $ 71,111 $ ( 16,749 ) $ ( 62,539 )

Foreign 600 ( 4,822 ) ( 3,170 )

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

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

Income (loss) before income taxes $ 71,711 $ ( 21,571 ) $ ( 65,709 )

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

Year Ended December 31,

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Total deferred benefit ( 61,649 ) ( 13 ) ( 594 )

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):

Total (benefit) provision for income taxes $ ( 54,327 ) $ 1,975 $ ( 31 )

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

Year Ended December 31,

2024 2023 2022

Tax benefit at federal statutory rate $ ( 4,530 ) $ ( 13,799 ) $ ( 23,267 )

Tax provision (benefit) at federal statutory rate $ 15,059 $ ( 4,530 ) $ ( 13,799 )

State taxes, net of federal benefits 2,700 1,636 ( 609 )

Non-deductible officers' compensation 26,632 6,386 2,881

Non-deductible expenses 373 714 613

Transaction costs — — ( 731 )

Stock-based compensation 1,747 3,897 2,018

Warrants and earn-outs ( 1,141 ) 226 ( 15 )

Non-deductible officers' compensation 6,386 2,881 8,352

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

Research and development credits

( 4,801 ) ( 5,398 ) —

Non-deductible expenses 714 613 —

Stock-based compensation ( 28,361 ) 1,747 3,897

Change in valuation allowance ( 65,021 ) 1,330 7,794

Other, net 233 ( 136 ) ( 62 )

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Net operating loss carryforwards $ 22,764 $ 53,309

Research and other credits 3,779 —

Capitalized research and development 36,419 15,106

Inventory 6,131 1,890

Research and other credits 5,331 3,779

Accrued expenses and reserves 3,963 2,164

Operating lease liabilities 2,945 2,615

Stock-based compensation 2,425 3,572

Inventory 1,890 2,338

Other intangible assets 289 350

Deferred revenue 192 124

Operating lease liabilities 2,615 1,382

Other deferred tax assets 907 87

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Deferred tax liabilities:

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

Fixed assets ( 4,613 ) ( 1,532 )

Prepaid expenses ( 1,825 ) —

Other intangible assets ( 3,954 ) ( 4,777 )

Operating lease right-of-use assets

( 2,824 ) ( 2,519 )

Prepaid expenses ( 829 ) ( 1,825 )

Deferred state income tax ( 3,846 ) —

Other deferred tax liabilities ( 1,204 ) ( 1,859 )

Total deferred tax liabilities ( 17,270 ) ( 12,512 )

Net deferred tax liabilities $ ( 22 ) $ ( 35 )

Net deferred tax assets (liabilities) $ 61,603 $ ( 22 )

Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain.

Due to the Company's history of losses, the Company believes that it is not more likely than not that all of the deferred tax assets can be realized as of December 31, 2023 and 2022.

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

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.

Prior to 2024, the Company concluded that a valuation allowance was required against its deferred tax assets.

The Company considers all available positive and negative evidence in its assessment of the recoverability of its deferred tax assets each reporting period.

During 2024, the Company determined that a valuation allowance against its domestic deferred tax assets was no longer required, primarily due to sustained tax profitability (pre-tax earnings or loss adjusted by permanent book to tax differences) beginning in the fourth quarter of 2023 and continuing throughout 2024, which is objective and verifiable evidence, as well as anticipated future earnings.

The Company continues to believe it is more likely than not that it will realize its domestic deferred tax assets.

The Company’s judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in the level of tax profitability that the Company achieves and changes in tax laws or regulations.

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.

The valuation allowance decreased by $ 68.0 million and increased by $ 1.1 million during the years ended December 31, 2024 and 2023, respectively.

The decrease during the year ended December 31, 2024 was primarily related to the full release of the valuation allowance on the Company’s domestic deferred tax assets, a majority of which was recognized during the third quarter of 2024, partially offset by current period tax activity.

As of December 31, 2024, the Company has $ 60.8 million, $ 97.2 million, and $ 9.9 million in federal, state, and foreign loss carryforwards (not tax effected), respectively, of which $ 60.2 million, $ 3.3 million, and $ 9.9 million in federal, state, and foreign loss carryforwards do not expire.

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.

While an immaterial amount of state loss carryforwards expire in 2025, a substantial majority of state loss carryforwards begin to expire in 2030.

As of December 31, 2024, the Company had $ 6.9 million of federal tax credit carryforwards, prior to the netting of uncertain tax positions, that will begin to expire in 2041, and $ 3.6 million of state tax credit carryforwards, prior to the netting of uncertain tax positions, that do not expire.

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.

Generally, after a change in control, a loss corporation cannot deduct carryforward tax attributes in excess of the limitation prescribed by Sections 382 and 383.

Therefore, certain of the Company’s carryforward tax attributes may be subject to an annual limitation regarding their utilization against taxable income in future periods.

Therefore, certain of the Company’s carryforward tax attributes are subject to an annual limitation regarding their utilization against taxable income in future periods.

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

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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):

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

Changes in unrecognized tax benefits for the years ended December 31, 2024 and 2023, excluding interest and penalties, were as follows (in thousands):

Balance at December 31, 2022 $ —

2 unchanged sentences

Balance at December 31, 2023 2,313

Increases in balances related to prior year tax positions

Increases in balances related to current year tax positions

Balance at December 31, 2024 $ 6,011

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.

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

During the years ended December 31, 2024, 2023, and 2022, no interest or penalties were required to be recognized relating to unrecognized tax benefits.

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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 .

In January 2025, the Company executed a 127-month non-cancelable lease for 289,463 square feet of office, warehouse, and pharmacy space in Mesa, Arizona.

The lease includes a 7 - month early entry period for tenant improvement work, along with a tenant improvement allowance of up to $ 4.3 million.

Total minimum lease payments are $ 37.5 million, net of rent abatement for an initial 7-month period beginning after the early entry period, and with an annual escalation of between 3 % and 4 %.

The Company has the option to extend the lease term for a period of 60 months.

In February 2025, the Company satisfied all closing conditions of an asset purchase agreement, executed in December 2024, to acquire certain manufacturing assets from C S Bio Co., a company located in the United States, for total cash and Class A common stock consideration of up to approximately $ 65.0 million .

The Company entered into the asset purchase agreement in order to strengthen its supply chain capabilities.

The upfront cash and Class A common stock consideration is approximately $ 30.0 million, with an additional maximum of $ 5.0 million in Class A common stock consideration payable on the one year anniversary of closing in accordance with the terms of the asset purchase agreement.

A maximum additional $ 30.0 million in cash and Class A common stock consideration is payable upon reaching certain earn-out conditions, which is subject to a continued service condition as defined in the agreement.

The initial accounting for the transaction is incomplete at the date these financial statements are available to be issued, as the information necessary to complete such evaluation is in the process of being obtained and more thoroughly evaluated.

The Company has not yet determined the accounting purchase price

allocation of the purchase consideration described above, which includes evaluating the fair value of the acquired assets and assumed liabilities, and the valuation of contingent consideration to be transferred.

To facilitate continued operation of the purchased manufacturing assets , the Company entered into a 120-month non-cancelable lease for a 38,483 square foot manufacturing facility located in Menlo Park, California.

Total minimum lease payments are $ 43.5 million, with an annual escalation of 3.5 %.

The Company has the option to extend the lease term for a period of 60 months.

In February 2025, the Company executed and satisfied all closing conditions of a purchase agreement to acquire all membership interests of Sigmund NJ, LLC, marketed as Trybe Labs, a lab testing services business located in the United States, for total cash consideration of $ 5.0 million .

The Company entered into the purchase agreement to have the capacity to add lab testing capabilities to its platform in the future.

In February 2025, the Company entered into a Revolving Credit and Guaranty Agreement with certain lenders and JPMorgan Chase Bank, N.A., as administrative and collateral agent, which provides for a three-year senior secured revolving line of credit in an amount up to $ 175.0 million (the “Revolving Credit Facility”).

The Revolving Credit Facility includes letter of credit and swing line loan sub-limits of $ 40.0 million and $ 20.0 million, respectively, and an accordion option, which, if exercised, would allow the Company to increase the aggregate revolving commitment amount by up to $ 125.0 million, plus additional amounts if the Company is able to satisfy a leverage test and certain other conditions.

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