Hims & Hers Health, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm 70 Consolidated Balance Sheets 72 Consolidated Statements of Operations and Comprehensive Income ( Loss ) 73 Consolidated Statement of Stockholders’ Equity 74 Consolidated Statements of Cash Flows 75 Notes to Consolidated Financial Statements 76 69 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors Hims & Hers Health, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Hims & Hers Health, Inc. 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. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective 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. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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 company; 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. 70 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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. 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 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. /s/ KPMG LLP We have served as the Company’s auditor since 2019. San Francisco, California February 24, 2025 71 Table of Contents Hims & Hers Health, Inc. Consolidated Balance Sheets (In Thousands, Except Share and Per Share Data) December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 220,584 $ 96,663 Short-term investments 79,667 124,318 Inventory 64,427 22,464 Prepaid expenses and other current assets 31,153 21,608 Total current assets 395,831 265,053 Restricted cash 856 856 Goodwill 112,728 110,881 Property, equipment, and software, net 82,083 36,143 Intangible assets, net 43,410 18,574 Operating lease right-of-use assets 10,881 9,588 Deferred tax assets, net 61,603 — Other long-term assets 147 91 Total assets $ 707,539 $ 441,186 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 91,180 $ 43,070 Accrued liabilities 53,013 28,972 Deferred revenue 75,285 7,733 Earn-out payable — 7,412 Operating lease liabilities 1,889 1,281 Total current liabilities 221,367 88,468 Operating lease liabilities 9,456 8,667 Other long-term liabilities — 22 Total liabilities 230,823 97,157 Commitments and contingencies (Note 13) Stockholders' equity: Common stock – Class A shares, par value $ 0.0001 , 2,750,000,000 shares authorized and 212,459,586 and 205,104,120 shares issued and outstanding as of December 31, 2024 and 2023, respectively; Class V shares, par value $ 0.0001 , 10,000,000 shares authorized and 8,377,623 shares issued and outstanding as of December 31, 2024 and 2023 22 21 Additional paid-in capital 719,155 712,307 Accumulated other comprehensive loss ( 324 ) ( 124 ) Accumulated deficit ( 242,137 ) ( 368,175 ) Total stockholders' equity 476,716 344,029 Total liabilities and stockholders' equity $ 707,539 $ 441,186 See accompanying notes to consolidated financial statements. 72 Table of Contents Hims & Hers Health, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (In Thousands, Except Share and Per Share Data) Year Ended December 31, 2024 2023 2022 Revenue $ 1,476,514 $ 872,000 $ 526,916 Cost of revenue 303,379 157,051 118,194 Gross profit 1,173,135 714,949 408,722 Operating expenses: Marketing 678,844 446,435 272,587 Operations and support 185,802 119,857 77,403 Technology and development 78,819 48,227 29,237 General and administrative 167,767 129,883 98,192 Total operating expenses 1,111,232 744,402 477,419 Income (loss) from operations 61,903 ( 29,453 ) ( 68,697 ) Other income (expense): Change in fair value of liabilities — ( 1,075 ) 70 Other income, net 9,808 8,957 2,918 Total other income, net 9,808 7,882 2,988 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. 73 Table of Contents Hims & Hers Health, Inc. Consolidated Statements of Stockholders' Equity (In Thousands, Except Share Data) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity Shares Amount Balance as of December 31, 2021 204,791,986 $ 20 $ 613,687 $ ( 137 ) $ ( 278,951 ) $ 334,619 Issuance of common stock upon vesting of RSUs, net of shares withheld for taxes 1,632,111 — — — — — Payments for taxes related to net share settlement of equity awards — — ( 3,901 ) — — ( 3,901 ) Exercise of vested stock options 1,611,687 1 2,245 — — 2,246 Vesting of early exercised stock options — — 197 — — 197 Issuance of common stock under employee stock purchase plan 393,528 — 1,178 — — 1,178 Stock-based compensation — — 43,220 — — 43,220 Other comprehensive loss — — — ( 140 ) — ( 140 ) Net loss — — — — ( 65,678 ) ( 65,678 ) Balance as of December 31, 2022 208,429,312 21 656,626 ( 277 ) ( 344,629 ) 311,741 Issuance of common stock upon vesting of RSUs, net of shares withheld for taxes 3,472,456 — — — — — Payments for taxes related to net share settlement of equity awards — — ( 14,096 ) — — ( 14,096 ) Exercise of vested stock options 1,222,548 — 2,322 — — 2,322 Issuance of common stock under employee stock purchase plan 594,885 — 2,298 — — 2,298 Repurchases and retirement of common stock ( 237,458 ) — ( 1,999 ) — — ( 1,999 ) Stock-based compensation — — 67,156 — — 67,156 Other comprehensive income — — — 153 — 153 Net loss — — — — ( 23,546 ) ( 23,546 ) Balance as of December 31, 2023 213,481,743 21 712,307 ( 124 ) ( 368,175 ) 344,029 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. 74 Table of Contents Hims & Hers Health, Inc. Consolidated Statements of Cash Flows (In Thousands) Year Ended December 31, 2024 2023 2022 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 Stock-based compensation 92,322 66,080 42,817 Change in fair value of liabilities — 1,075 ( 70 ) Net (accretion) amortization on securities ( 4,355 ) ( 5,686 ) 146 Benefit for deferred taxes ( 61,649 ) ( 13 ) ( 594 ) Impairment of long-lived assets 114 429 1,127 Non-cash operating lease cost 2,546 1,922 1,605 Non-cash acquisition-related costs — 2,691 837 Non-cash other 357 195 — Changes in operating assets and liabilities: Inventory ( 41,612 ) ( 902 ) ( 8,004 ) Prepaid expenses and other current assets ( 9,494 ) ( 6,395 ) ( 6,335 ) Other long-term assets ( 56 ) ( 58 ) 17 Accounts payable 43,710 7,324 12,723 Accrued liabilities 23,791 16,524 909 Deferred revenue 67,552 6,261 ( 1,716 ) Operating lease liabilities ( 2,443 ) ( 1,933 ) ( 1,605 ) Earn-out payable ( 2,825 ) — ( 10,184 ) Net cash provided by (used in) operating activities 251,084 73,483 ( 26,531 ) Investing activities Purchases of investments ( 160,564 ) ( 157,239 ) ( 187,700 ) Maturities of investments 208,940 170,051 194,259 Proceeds from sales of investments 725 1,574 35,846 Investment in website and mobile application development and internal-use software ( 11,095 ) ( 9,272 ) ( 4,533 ) 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 ) Net cash (used in) provided by investing activities ( 19,048 ) ( 12,106 ) 34,699 Financing activities 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 ) Repurchases of common stock ( 83,039 ) ( 1,999 ) — 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 ) Increase (decrease) in cash, cash equivalents, and restricted cash 123,921 49,891 ( 25,012 ) Cash, cash equivalents, and restricted cash at beginning of period 97,519 47,628 72,640 Cash, cash equivalents, and restricted cash at end of period $ 221,440 $ 97,519 $ 47,628 Reconciliation of cash, cash equivalents, and restricted cash Cash and cash equivalents $ 220,584 $ 96,663 $ 46,772 Restricted cash 856 856 856 Total cash, cash equivalents, and restricted cash $ 221,440 $ 97,519 $ 47,628 Supplemental disclosures of cash flow information Cash paid for taxes $ 7,916 $ 1,109 $ 636 Non-cash investing and financing activities 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 — — 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. 75 Table of Contents Hims & Hers Health, Inc. Notes to Consolidated Financial Statements 1. Organization Hims & Hers Health, Inc. (the “Company” or “Hims & Hers”), incorporated in Delaware, is a consumer-first platform transforming the way customers fulfill their health and wellness needs. The Company’s mission is to help the world feel great through the power of better health. The Hims & Hers platform includes access to a highly-qualified and technologically-capable provider network, a clinically-focused electronic medical records system, digital prescriptions, cloud-enabled pharmacy fulfillment, and personalization capabilities. The Company’s digital platform enables access to treatments for a broad range of conditions, including those related to sexual health, hair loss, dermatology, mental health, and weight loss. Hims & Hers connects patients to licensed healthcare professionals who can prescribe medications when appropriate. Prescriptions are fulfilled online through licensed pharmacies on a subscription basis, making accessing treatments simple, affordable, and straightforward. Through the Hims & Hers mobile applications, consumers can access a range of educational programs, wellness content, community support, and other services that promote lifelong health and wellness. In addition, the Company offers access to a range of health and wellness products designed to meet individual needs, which can include curated prescription and non-prescription products. The Company’s products and services are available for purchase directly by customers on the Company’s websites and mobile applications. Additionally, Hims & Hers non-prescription products can be found in tens of thousands of top retail locations in the United States. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared pursuant to accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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. For the years ended December 31, 2024, 2023, and 2022, the Company had operations primarily in the United States, with insignificant operations in the United Kingdom. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and accompanying notes. 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. Actual results experienced by the Company may differ from management’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected. 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, 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. 76 Table of Contents Concentration Risk The Company’s financial instruments that are potentially exposed to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, investments, and accounts receivable. The Company maintains its cash, cash equivalents, short-term investments, and restricted cash with high-quality financial institutions with investment-grade ratings. The majority of the cash balances are with U.S. banks and are insured to the extent defined by the Federal Deposit Insurance Corporation. 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. 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. In addition, revenue related to sales in foreign countries was less than 10% of revenue for each of those years. Foreign Currency Translation The Company’s consolidated financial statements are presented in U.S. dollars. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are presented as foreign currency translation adjustments, a component of other comprehensive (loss) income on the consolidated statements of operations and comprehensive income (loss). Business Combinations The Company accounts for its business combinations using the acquisition method of accounting. The purchase price is attributed to the fair value of the assets acquired and liabilities assumed. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of the purchase price of acquisition over the fair value of the identifiable net assets of the acquiree is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. 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. 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. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions, and competition. 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, 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 77 Table of Contents 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. Segment Reporting The Company is managed as a single operating segment on a consolidated basis, inclusive of acquisitions. 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 The Company considers all highly liquid investments purchased with an original maturity or remaining maturity of three months or less at the date of purchase to be cash equivalents. The Company deposits its cash and cash equivalents with financial institutions. The restricted cash balance comprises cash collateral that is held by the Company’s primary financial institution to secure a letter of credit issued as a security deposit for the Company’s warehouse facility in New Albany, Ohio. Investments Available-for-sale debt instruments with original maturities at the date of purchase greater than three months and remaining maturities of less than one year are classified as short-term investments. Available-for-sale debt instruments with original maturities at the date of purchase and remaining maturities of greater than one year are classified as long-term investments. The Company intends to sell such investments, if any, at or close to maturity. The investments are designated as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax, recorded in other comprehensive (loss) 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, 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, 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 The fair value of a financial instrument is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to ongoing fair value measurement are categorized and disclosed into one of the three categories depending on observable or unobservable inputs employed in the measurement. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows: • Level 1: Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. 78 Table of Contents • Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Inventory Inventory primarily consists of finished goods and raw materials that are located at Company-managed and third-party fulfillment warehouses and pharmacies. Inventory is stated at the lower of cost and net realizable value and inventory cost is determined by the weighted average cost method. The Company reserves for expired, slow-moving, and excess inventory by estimating the net realizable value based on the potential future use of such inventory. Management monitors inventory to identify events that would require impairment due to slow-moving, expired, or obsolete inventory and reduces the value of inventory when required. Obsolete inventory balances are written off against the inventory allowance when management determines that the inventory cannot be sold. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of balances related to prepayments or vendor deposits for insurance, marketing, software, inventory and other operating costs, and trade and other accounts receivables. Prepaid expenses are recorded when payment has been made in advance for goods and services. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Receivables are stated at amounts estimated by management to be equal to their net realizable values. The allowance for doubtful accounts is the Company's best estimate of the amount of expected credit losses on its accounts receivable. The expectation of collectability is based on the Company's review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and an allowance is recorded accordingly. 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, 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. Property, Equipment, and Software, Net Property, equipment, and software consist of purchased and internal-use software and website development, facility equipment and other tangible property, leasehold improvements, and assets not placed in service. Property, equipment, and software are depreciated or amortized using the straight-line method over the estimated useful lives ranging from two to 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. Maintenance and repair costs are charged to expense as incurred, and expenditures that extend the useful lives of assets are capitalized. Capitalizable website and mobile application development and internal-use software costs are recorded at cost, less amortization. The costs incurred during the website application and infrastructure stages as well as costs incurred during the graphics and content development stages are capitalized; all other costs are expensed as incurred. In addition, the Company incurs costs to develop software for internal use. The costs incurred during the application development phase are capitalized until the project is completed and the asset is ready for intended use. All costs that relate to the preliminary project and post-implementation operation phases of development are expensed as incurred. 79 Table of Contents The following table summarizes the estimated amortization of website development and internal-use software costs subsequent to December 31, 2024 (in thousands): 2025 $ 9,453 2026 6,970 2027 2,756 Total $ 19,179 Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company operates as one reporting unit. When testing goodwill for impairment, the Company may first perform an optional qualitative assessment. If the Company determines it is not more likely than not the reporting unit’s fair value is less than its carrying value, then no further analysis is necessary. If the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying amount, then the quantitative impairment test will be performed. 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 $ 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 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, 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 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. The operating lease ROU assets represent the Company’s right to use the underlying assets for the lease terms and the lease liabilities represent the Company’s obligation to make lease payments arising from the leases. 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 80 Table of Contents 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. The Company does not assume renewals or early terminations unless it is reasonably certain to exercise these options at commencement. The Company monitors for events or changes in circumstances that require a reassessment of its leases. When a reassessment results in the remeasurement of a lease liability, an adjustment is made to the carrying amount of the corresponding ROU asset. The Company does not allocate consideration between lease and non-lease components. The Company's lease agreements contain variable costs such as common area maintenance, operating expenses, or other costs. Variable lease payments are recognized in the period in which the obligation for those payments are incurred. In addition, the Company does not recognize ROU assets or operating lease liabilities for leases with a term of 12 months or less of all asset classes. Operating lease expense is recognized on a straight-line basis over each lease term. Revenue Recognition The Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company’s consolidated revenue primarily comprises online sales of health and wellness products and services through the Company’s websites and mobile applications, including prescription and non-prescription products. In contracts that contain prescription products issued as the result of a consultation, revenue also includes medical consultation services and post-consultation service support provided by Affiliated Medical Groups (defined below). Additionally, the Company offers a range of health and wellness products through wholesale partners. Revenue consists of the following (in thousands): Year Ended December 31, 2024 2023 2022 Online Revenue $ 1,437,937 $ 842,381 $ 502,507 Wholesale Revenue 38,577 29,619 24,409 Total revenue $ 1,476,514 $ 872,000 $ 526,916 For Online Revenue, the Company defines its customer as an individual who purchases products or services through its websites or mobile applications. For Wholesale Revenue, the Company defines its customer as a wholesale partner, with the exception of consignment arrangements, where its customer is defined as an individual who purchases products through certain third-party platforms. The transaction price in the Company’s contracts with customers is the total amount of consideration to which the Company expects to be entitled in exchange for transferring products or services to the customer. The Company’s contracts that contain prescription products issued as the result of a consultation primarily include the following performance obligations: access to (i) products, as well as medication adjustments, as applicable, and (ii) consultation services, as well as post-consultation service support, as applicable. The Company’s contracts 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 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. The customer obtains control of the products and services upon the Company’s completion of its performance obligations. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation on a relative stand-alone selling price basis. 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, 2024, 2023, and 2022, service revenue, comprising consultation services and post-consultation service support, represented less than 10% of consolidated revenues. 81 Table of Contents 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; collectively referred to as “Providers” or individually, a “Provider”) to provide consultation services. Refer to Note 11 – Variable Interest Entities. The Company accounts for service revenue as a principal in the arrangement with its customers. This conclusion is reached because (i) the Company determines which Affiliated Medical Group and Provider provides the consultation to the customer; (ii) the Company is primarily responsible for the satisfactory fulfillment and acceptability of the services; (iii) the Company incurs costs for consultation services even for visits that do not result in a prescription and the sale of products; 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”), (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 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; (iv) the Company is responsible for refunds of the prescription medication after transfer of control to the customer; and (v) the Company, in its sole discretion, sets all listed prices charged on its websites and mobile applications for products and services. The Company estimates refunds using the expected value method primarily based on historical refunds granted to customers. The Company updates its estimate at the end of each reporting period and recognizes the estimated amount as contra-revenue with a corresponding refund liability. Sales, value-added, and other taxes are excluded from the transaction price and, therefore, from revenue. The Company accounts for shipping activities, consisting of direct costs to ship products performed after the control of a product has been transferred to the customer, in cost of revenue. For online sales, payment for prescription medication and non-prescription products is 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 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 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. 82 Table of Contents Stock-Based Compensation The fair value of stock options, equity-classified warrants issued to vendors, restricted stock units (“RSUs”), and performance RSUs (“PRSUs”) are measured at the grant date fair value. The fair value of employee stock options and vendor warrants are generally determined using the Black-Scholes Merton (“BSM”) option-pricing model using various inputs, including estimates of expected volatility, term, risk-free rate, and future dividends. Stock options that were granted to the Company’s CEO with performance and market conditions and earn-out RSUs were valued using the Monte Carlo simulation model. 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 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. The Company’s Employee Stock Purchase Plan (“ESPP”) permits eligible employees to purchase the Company’s Class A common stock during pre-specified offering periods at a discount established by the compensation committee. The purchase price is 85 % of the lower of the fair market value of the Company’s Class A common stock on the first trading day of the offering period and the fair market value on the purchase date. 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 BSM option-pricing model and is recognized over the requisite service period, which is the withholding period. Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax reporting basis of assets and liabilities. These differences are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company recognizes the effect on deferred income taxes of a change in tax rates in the period that includes the enactment date. The Company provides a valuation allowance, if necessary, to reduce its deferred tax assets to the net amount it believes is more likely than not to be realized. 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. 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. The first step is to determine whether it is more likely than not that the tax position will be sustained on the basis of the technical merits of the position. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company's policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes on the consolidated statement of operations. Employee Benefit Plan The Company has established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the Internal Revenue Code. The Company contributes 50 % of eligible employee’s elective deferrals up to an annual maximum of three thousand dollars per employee. The Company recognized matching contributions cost of $ 2.9 million, $ 2.0 million, and $ 1.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. 83 Table of Contents Advertising 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, 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 . Liquidity 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 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 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 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 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, 84 Table of Contents 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 ASU on its consolidated financial statements and related disclosures. 3. Acquisitions 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): 503B pharmacy license $ 28,596 Goodwill 1,847 Other net assets 557 Net assets acquired $ 31,000 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 $ 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. 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. 4. Investments Short-term investments as of December 31, 2024, consist of the following (in thousands): Adjusted Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury bills $ 60,040 $ 120 $ — $ 60,160 Corporate bonds 18,058 3 ( 1 ) 18,060 Government and government agency 1,446 1 — 1,447 Total short-term investments $ 79,544 $ 124 $ ( 1 ) $ 79,667 85 Table of Contents Short-term investments as of December 31, 2023, consist of the following (in thousands): Adjusted Cost Unrealized Gains Unrealized Losses Fair Value U.S. 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 5. Inventory Inventory consists of the following (in thousands): December 31, 2024 2023 Finished goods $ 35,077 $ 15,221 Raw materials 29,350 7,243 Total inventory $ 64,427 $ 22,464 6. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): December 31, 2024 2023 Prepaid expenses $ 16,172 $ 10,665 Wholesale trade and other receivables, net 6,080 6,748 Other current assets 8,901 4,195 Total prepaid expenses and other current assets $ 31,153 $ 21,608 7. Property, Equipment, and Software, Net Property, equipment, and software, net consist of the following (in thousands): December 31, 2024 2023 Purchased and internal-use software and website development $ 34,100 $ 22,970 Facility equipment and other tangible property 27,785 8,254 Leasehold improvements 10,933 2,256 Assets not placed in service 33,764 14,907 Total property, equipment, and software 106,582 48,387 Less: accumulated depreciation and amortization ( 24,499 ) ( 12,244 ) Total property, equipment, and software, net $ 82,083 $ 36,143 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 immaterial for each of the years ended December 31, 2024, 2023, and 2022. 86 Table of Contents 8. Intangible Assets, Net Intangible assets, net as of December 31, 2024 consist of the following (in thousands): Gross Amount Accumulated Amortization and Impairment Net Carrying Value Weighted Average Remaining Useful Life (Years) 503B pharmacy license $ 28,596 $ ( 953 ) $ 27,643 9.7 Trade name 24,170 ( 9,256 ) 14,914 6.5 Other 4,786 ( 3,933 ) 853 6.0 Intangible assets, net $ 57,552 $ ( 14,142 ) $ 43,410 8.5 Intangible assets, net as of December 31, 2023 consist of the following (in thousands): Gross Amount Accumulated Amortization and Impairment Net Carrying Value Weighted Average Remaining Useful Life (Years) Trade name $ 24,170 $ ( 6,880 ) $ 17,290 7.4 Other 4,803 ( 3,519 ) 1,284 5.7 Intangible assets, net $ 28,973 $ ( 10,399 ) $ 18,574 7.3 Amortization expense for intangible assets was $ 3.8 million, $ 3.5 million, and $ 4.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. Impairment expense for intangible assets was $ 0.7 million for the year ended December 31, 2022. There was no impairment expense for the years ended December 31, 2024 and 2023. Amortization that will be charged to expense over the remaining life of the intangible assets subsequent to December 31, 2024 is as follows (in thousands): 2025 $ 5,481 2026 5,334 2027 5,208 2028 5,208 2029 and thereafter 22,179 $ 43,410 9. Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2024 2023 Marketing $ 21,839 $ 12,331 Payroll 12,067 7,888 Professional services 8,463 5,341 Other accruals 10,644 3,412 Total accrued liabilities $ 53,013 $ 28,972 87 Table of Contents 10. Operating Leases 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, 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. As of December 31, 2024, the weighted average remaining lease term and weighted average discount rate were 5.5 years and 8.7 %, respectively. Future minimum lease payments under the Company's non-cancelable operating lease with an initial lease term in excess of one year subsequent to December 31, 2024 are as follows (in thousands): 2025 $ 2,803 2026 2,866 2027 2,432 2028 2,121 2029 2,124 2030 and thereafter 2,043 Gross lease payments 14,389 Less: imputed interest ( 3,044 ) Present value of net future minimum lease payments $ 11,345 11. Variable Interest Entities The variable interest entities (“VIEs”) are: (i) the Affiliated Medical Groups; and (ii) the Affiliated Pharmacies. The Company determined that it is the primary beneficiary of these entities for accounting purposes because it has the ability to direct the activities that most significantly affect the entities’ economic performance and has the obligation to absorb the losses. Under the VIE model, the Company presents the results of operations, cash flows, and the financial position of the VIEs as part of the consolidated financial statements of the Company as if the consolidated group were a single economic entity. The assets of the VIEs can only be used to settle the obligations of the VIEs. There is no noncontrolling interest upon consolidation of the entities. The results of operations and cash flows of the VIEs are also included in the Company’s consolidated financial statements. 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, 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. 88 Table of Contents 12. Fair Value Measurements The Company’s fair value hierarchy for its financial assets that are measured at fair value on a recurring basis as of December 31, 2024, is as follows (in thousands): Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents: Money market funds $ 64,717 $ — $ — $ 64,717 Short-term investments: U.S. Treasury bills 60,160 — — 60,160 Corporate bonds — 18,060 — 18,060 Government and government agency — 1,447 — 1,447 Restricted cash: Money market funds 856 — — 856 Total assets $ 125,733 $ 19,507 $ — $ 145,240 The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2023, is as follows (in thousands): Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents: Money market funds $ 42,492 $ — $ — $ 42,492 Short-term investments: U.S. 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: Money market funds 856 — — 856 Total assets $ 107,181 $ 60,485 $ — $ 167,666 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 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. 13. Commitments and Contingencies Purchase Obligations 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. 89 Table of Contents Lease Commitments Refer to Note 10 – Operating Leases for discussion of the Company’s future lease commitments. Legal Proceedings From time to time, the Company is a party to litigation, various claims, and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits, and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions, or relief. Management is not currently aware of any matters that are reasonably likely to have a material adverse impact on the Company’s business, financial position, results of operations, or cash flows. 14. Stockholders’ Equity Common Stock The Company has two classes of common stock, Class A and Class V common stock. The rights are identical, including liquidation and dividend rights, except Class V common stock has additional voting rights. Share Repurchase 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. RSU Releases 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. In connection with the releases, 2,425,541 , 1,729,045 , and 701,584 shares of Class A common stock, respectively, were withheld for the payment of employee taxes. 2017 Stock Plan and 2020 Equity Incentive 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, 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 90 Table of Contents 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. For the year ended December 31, 2024, 73,238 shares of Class A common stock subject to awards granted under the 2017 Plan that were forfeited after the adoption of the 2020 Plan were added to the 2020 Plan reserve. Additionally, on January 1, 2024, 10,674,087 shares of Class A common stock were automatically added to the 2020 Plan reserve. Therefore, as of December 31, 2024, there were 54,360,277 shares of Class A common stock reserved and 15,162,111 shares of Class A common stock available for issuance under the 2020 Stock Plan. There were no more shares available for grant under the 2017 Plan since the 2017 Plan was replaced by the 2020 Plan. 2020 Employee Stock Purchase Plan In January 2021, the Board of Directors adopted the Company’s Employee Stock Purchase Plan (“ESPP”). The total shares of Class A common stock initially reserved under the ESPP is limited to 4,000,000 shares of Class A common stock. Beginning on January 1, 2022 and ending on January 1, 2041 (unless extended by the Board of Directors and approved by the Company’s shareholders), the number of authorized shares of common stock under the ESPP will automatically increase each fiscal year by the lesser of (i) 1 % of the total number of Class A and Class V common stock issued and outstanding on the last day of the preceding fiscal year, (ii) 12,000,000 shares of Class A common stock, or (iii) a number of shares of Class A common stock determined by the Board of Directors. As of December 31, 2023, there were 6,047,919 and 5,059,506 shares of Class A common stock reserved and available for issuance, respectively, under the ESPP. There were no shares added to the ESPP reserve on January 1, 2024. 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, 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. Under the ESPP, eligible employees may purchase the Company’s Class A common stock during pre-specified offering periods at a discount established by the Company’s compensation committee. The purchase price is 85 % of the lower of the fair market value of the Company’s Class A common stock on the first trading day of the offering period or the fair market value on the purchase date. Under the ESPP, the Company may specify offering periods with durations of not more than 27 months, and may specify shorter purchase periods within each offering period. Employees participating in the ESPP commence payroll withholdings that accumulate through the end of the respective offering period. As of December 31, 2024, $ 0.8 million has been withheld via employee payroll deductions for employees who have opted to participate in the purchase periods ending May 2025. As of December 31, 2024, there was $ 4.1 million of unrecognized stock-based compensation related to the ESPP which is expected to be recognized over a weighted average period of 1.43 years. Stock Options 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. On June 17, 2020, the board of directors of Hims granted 3,246,139 and 1,623,070 stock options to the CEO with an exercise price of $ 2.43 to vest upon either (i) an acquisition of the Company with per share consideration equal to at least $ 22.99 and $ 38.31 , respectively, or (ii) a per share price on a public stock exchange that is at least equal to $ 22.99 and $ 38.31 , respectively. The CEO is required to be employed at the time the per share consideration/price is achieved in order to receive the awards, but the awards are not subject to any other service condition. The Company recognizes expense related to these awards based on the fair value and derived service period as measured using a Monte Carlo simulation model, and the expense is accelerated if the requirements outlined in (i) and (ii) above are achieved. The grant date fair value was $ 16.6 million for these awards. The $ 22.99 per share price threshold related to awards for the 3,246,139 stock options was achieved in February 2021. 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, 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 91 Table of Contents 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. Vesting is cumulative in subsequent years if the market condition was not previously met. The Company recognizes expense related to this award for each tranche individually based on the fair value and requisite service period, which is the greater of the derived service period and the explicit service period. The fair value and the derived service term of the market condition were both measured using a Monte Carlo simulation model. The total grant date fair value was $ 3.8 million for this award. 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. 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 Expected term (in years) 6.02 6.02 Expected volatility 49.9 % 48.0 % Risk-free interest rate 4.2 % 2.0 % Expected dividend yield — % — % Option activity (excluding the stock options granted to the CEO outlined above) is as follows (in thousands, except for weighted average exercise price and weighted average contractual term in years): Shares Weighted Average Exercise Price Weighted Average Contractual Period (in Years) Aggregate Intrinsic Value Outstanding at December 31, 2023 13,784 $ 5.14 7.14 $ 57,972 Exercised ( 4,002 ) 5.06 Forfeited and expired ( 45 ) 9.61 Outstanding at December 31, 2024 9,737 5.15 6.33 185,326 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 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. 92 Table of Contents The options outstanding and exercisable as of December 31, 2024 (excluding the stock options granted to the CEO outlined above) have been aggregated into ranges for additional disclosure as follows (in thousands, except weighted average remaining contractual life and exercise price): Options Outstanding Options Exercisable Exercise Price Shares Weighted Average Remaining Contractual Life (in Years) Shares Weighted Average Remaining Contractual Life (in Years) $ 0.06 – 0.40 361 3.16 361 3.16 1.55 – 1.75 496 4.52 496 4.52 2.43 – 3.11 2,486 5.43 2,486 5.43 5.01 – 6.82 4,358 7.17 2,612 7.15 8.13 – 11.53 1,781 6.69 1,399 6.33 12.21 – 15.17 255 6.23 212 6.20 9,737 7,566 The options outstanding and exercisable as of December 31, 2023 (excluding the stock options granted to the CEO outlined above) have been aggregated into ranges for additional disclosure as follows (in thousands, except weighted average remaining contractual life and exercise price): Options Outstanding Options Exercisable Exercise Price Shares Weighted Average Remaining Contractual Life (in Years) Shares Weighted Average Remaining Contractual Life (in Years) $ 0.06 – 0.40 1,422 4.23 1,422 4.23 1.55 – 1.75 760 5.37 760 5.37 2.43 – 3.11 2,751 6.43 2,751 6.43 5.01 – 6.82 5,913 8.18 2,690 8.18 8.13 – 9.41 2,127 7.68 1,499 7.20 12.21 – 15.17 811 7.32 566 7.31 13,784 9,688 RSUs RSUs for new employees generally vest over four years , with 25 % vesting one year after the vesting commencement date on the first Company Quarterly Vesting Date (defined below) and the remaining grant vesting quarterly thereafter on the specified vesting dates of March 15, June 15, September 15, and December 15 (each, a “Company Quarterly Vesting Date” or collectively, “Company Quarterly Vesting Dates”). Additional RSUs granted to current employees generally vest quarterly on Company Quarterly Vesting Dates over four years . 93 Table of Contents RSU activity (excluding the performance RSUs outlined below) is as follows (in thousands, except for weighted average grant date fair value): Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2023 14,483 $ 8.08 Granted 9,540 14.74 Vested ( 6,830 ) 9.22 Forfeited and expired ( 1,436 ) 10.20 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 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 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 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. 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 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 2026 fiscal year. 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. The Company will continue to evaluate the likelihood of achieving the performance metrics on a quarterly basis. Warrants 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. 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 94 Table of Contents 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 Honest Health Limited, which is now Hims & Hers UK Limited (“HHL”). As part of the acquisition of HHL, the Company also recognized an earn-out liability based on the achievement of certain revenue targets. Vesting of the restricted shares and a portion of total earn-out payable to specific individuals are 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 four-year vesting period with 25 % vesting one year after the acquisition date and the remaining vesting quarterly thereafter. 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 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 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 income (loss) for the years ended December 31, 2024, 2023, and 2022 (in thousands): Year Ended December 31, 2024 2023 2022 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 Total stock-based compensation expense $ 92,322 $ 66,080 $ 42,817 The Company capitalized $ 2.3 million, $ 1.7 million, and $ 0.6 million of stock-based compensation, as internal-use software for the years ended December 31, 2024, 2023, and 2022 , respectively. 15. Related-Party Transactions 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. 95 Table of Contents 16. 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 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, 2024 2023 2022 Class A Class V Class A Class V Class A Class V Numerator: 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 ) Denominator: 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 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 PRSUs — 928,642 — Warrants to purchase Class A common stock — 561,058 561,058 Common stock issuable under the ESPP — 404,648 603,603 Common stock issued for early exercise of stock options — — 70,257 There were no Class V securities that were excluded in the computation of diluted net income (loss) per share for the periods presented. 96 Table of Contents 17. Segments 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 Less: 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. 97 Table of Contents 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. 18. Income Tax 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 ) 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, 2024 2023 2022 Current: Federal $ 1,639 $ 532 $ — State 5,683 1,456 563 Total current provision 7,322 1,988 563 Deferred: Federal ( 43,328 ) 12 ( 339 ) State ( 18,321 ) ( 25 ) ( 110 ) Foreign — — ( 145 ) Total deferred benefit ( 61,649 ) ( 13 ) ( 594 ) 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 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 ) Warrants and earn-outs ( 1,141 ) 226 ( 15 ) Research and development credits ( 4,801 ) ( 5,398 ) — Stock-based compensation ( 28,361 ) 1,747 3,897 Change in valuation allowance ( 65,021 ) 1,330 7,794 Other, net 233 ( 136 ) ( 62 ) Total $ ( 54,327 ) $ 1,975 $ ( 31 ) 98 Table of Contents The components of deferred tax assets and liabilities are as follows (in thousands): As of December 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 22,764 $ 53,309 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 Other intangible assets 289 350 Deferred revenue 192 124 Other deferred tax assets 907 87 Total gross deferred tax assets 81,366 82,996 Less valuation allowance ( 2,493 ) ( 70,506 ) Total deferred tax assets 78,873 12,490 Deferred tax liabilities: Fixed assets ( 4,613 ) ( 1,532 ) 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 assets (liabilities) $ 61,603 $ ( 22 ) 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 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 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. 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. 99 Table of Contents 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 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. Some of the Company’s net operating losses are limited by these ownership changes but the annual limitation does not have a significant impact on the consolidated financial statements. Subsequent ownership changes may subject the Company to annual limitations of its net operating losses. Such annual limitations could result in the expiration of the net operating loss and credit carryforwards before utilization. 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 $ — Increases in balances related to prior year tax positions 1,357 Increases in balances related to current year tax positions 956 Balance at December 31, 2023 2,313 Increases in balances related to prior year tax positions 2,042 Increases in balances related to current year tax positions 1,656 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 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. The Company files income tax returns in the United States, United Kingdom, and various state and local jurisdictions. Due to the net operating loss carryforward, the statute of limitations is open for 2017 and forward for all jurisdictions, none of which are currently under examination by any tax authorities. 19. Subsequent Events 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 100 Table of Contents 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. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.