Hims Hers Health Inc

Previous wording

The table below provides a breakdown of total revenue between Online Revenue and Wholesale Revenue, for the three months ended March 31, 2024 and 2023, as well as key metrics that drive Online Revenue (i.e., Subscribers, Monthly Online Revenue per Average Subscriber, Net Orders, and AOV) and the dollar and percentage change between such periods (in thousands, except for Monthly Online Revenue per Average Subscriber and AOV):

Current wording

The table below provides a breakdown of total revenue between Online Revenue and Wholesale Revenue, for the three and six months ended June 30, 2024 and 2023, as well as key metrics that drive Online Revenue (i.e., Subscribers, Monthly Online Revenue per Average Subscriber, Net Orders, and AOV) and the dollar and percentage change between such periods (in thousands, except for Monthly Online Revenue per Average Subscriber and AOV):

Previous wording

We generated $267.8 million in Online Revenue for the three months ended March 31, 2024, an increase of $83.6 million, or 45%, as compared to $184.2 million for the three months ended March 31, 2023. Growth in Online Revenue for the three months ended March 31, 2024 was primarily driven by growth in Subscribers, from whom we generated recurring and stable Monthly Online Revenue per Average Subscriber, as well as newer offerings, both of which led to growth in AOV and Net Orders.

Current wording

We generated $306.8 million in Online Revenue for the three months ended June 30, 2024, an increase of $105.7 million, or 53%, as compared to $201.2 million for the three months ended June 30, 2023. We generated $574.6 million in Online Revenue for the six months ended June 30, 2024, an increase of $189.3 million, or 49%, as compared to $385.4 million for the six months ended June 30, 2023. Growth in Online Revenue for the three and six months ended June 30, 2024 was primarily driven by growth in Subscribers, from whom we generated recurring and relatively stable, but growing, Monthly Online Revenue per Average Subscriber, as well as newer offerings, both of which led to growth in AOV and Net Orders.

Previous wording

We generated $10.4 million in Wholesale Revenue for the three months ended March 31, 2024, an increase of $3.8 million, or 58% as compared to $6.6 million for the three months ended March 31, 2023. Wholesale Revenue can fluctuate on a period-to-period basis due to various factors, including delayed inventory purchases from our partners, seasonality trends, launches of new merchants and timing of specialized campaigns.

Current wording

We generated $8.8 million in Wholesale Revenue for the three months ended June 30, 2024, an increase of $2.1 million, or 31%, as compared to $6.7 million for the three months ended June 30, 2023. We generated $19.2 million in Wholesale Revenue for the six months ended June 30, 2024, an increase of $5.9 million, or 44% as compared to $13.3 million for the six months ended June 30, 2023. Wholesale Revenue can fluctuate on a period-to-period basis due to various factors, including delayed inventory purchases from our partners, seasonality trends, launches of new merchants and timing of specialized campaigns.

Previous wording

Subscribers grew 41% to approximately 1.7 million as of March 31, 2024 as compared to approximately 1.2 million Subscribers as of March 31, 2023. Growth in Subscribers was driven by increased traffic to our platform (through our websites and mobile applications) as a result of our marketing activities, newer offerings, and improved onsite and customer onboarding experiences. Monthly Online Revenue per Average Subscriber remained constant at $55 for each of the three months ended March 31, 2024 and 2023. Monthly Online Revenue per Average Subscriber has remained relatively stable as a result of generally recurring and predictable uptake of our offerings by Subscribers, but can fluctuate on a period-to-period basis due to various factors, including price changes, product mix, and duration of Subscriptions.

Current wording

Subscribers grew 43% to approximately 1.9 million as of June 30, 2024 as compared to approximately 1.3 million Subscribers as of June 30, 2023. Growth in Subscribers was driven by increased traffic to our platform (through our websites and mobile applications) as a result of our marketing activities, newer offerings, and improved onsite and customer onboarding experiences. Monthly Online Revenue per Average Subscriber increased $4 to $57 for the three months ended June 30, 2024 as compared to $53 for the three months ended June 30, 2023. Monthly Online Revenue per Average Subscriber increased $1 to $56 for the six months ended June 30, 2024 as compared to $55 for the six months ended June 30, 2023. These increases were primarily due to newer offerings introduced during the second quarter of 2024. Monthly Online Revenue per Average Subscriber has increased throughout 2024, but can fluctuate on a period-to-period basis due to various factors, including price changes, product mix, and duration of Subscriptions.

Previous wording

As a result of growth in Subscribers, we generated approximately 2.5 million Net Orders for the three months ended March 31, 2024, an increase of 20% as compared to approximately 2.0 million Net Orders for the three months ended March 31, 2023. For the three months ended March 31, 2024, AOV was $109, an increase of 21% as compared to $90 for the three months ended March 31, 2023. AOV growth for the three months ended March 31, 2024 was driven by newer product offerings as well as product mixes shifting towards longer duration Subscriptions.

Current wording

As a result of growth in Subscribers, we generated approximately 2.5 million Net Orders for the three months ended June 30, 2024, an increase of 20% as compared to approximately 2.1 million Net Orders for the three months ended June 30, 2023. We generated approximately 5.0 million Net Orders for the six months ended June 30, 2024, an increase of 20% as compared to approximately 4.2 million Net Orders for the six months ended June 30, 2023. For the three months ended June 30, 2024, AOV was $121, an increase of 27% as compared to $95 for the three months ended June 30, 2023. For the six months ended June 30, 2024, AOV was $115, an increase of 24% as compared to $93 for the six months ended June 30, 2023. AOV growth for the three and six months ended June 30, 2024 was driven primarily by newer offerings introduced during the second quarter of 2024 as well as product mixes shifting towards longer duration Subscriptions.

Previous wording

We continuously test and optimize the online experience and offerings to improve the customer experience, maximize sales, and improve gross margin. Our Subscribers (sometimes also referred to by us as “members”) select a cadence at which they wish to receive product shipments. In addition to a 30-day cadence, we offer Subscribers the ability to select from a range of Subscription shipment cadences, from every 60 days to 360 days, depending on the product. Subscriptions automatically renew on the applicable cadence selected by the Subscriber when purchasing or updating the Subscription. To ensure timely delivery of prescription medications and in accordance with our terms and conditions, Subscribers may sometimes be charged, and products may sometimes be shipped, earlier than their regularly scheduled cadence to accommodate holidays or for other operational reasons to support continuity of treatment. The Subscriber is typically billed upon each shipment. Subscribers can cancel Subscriptions in between billing periods to stop receiving additional products and can reactivate Subscriptions at any time. In addition, our customers can purchase product bundles or defined product kits, either consisting of non-prescription over-the-counter products or non-prescription products together with prescription medications, for a single all-inclusive price. Such offerings and their uptake by Subscribers have contributed to the generally stable and predictable nature of our Monthly Online Revenue per Average Subscriber. Additionally, the uptake of these offerings has resulted in higher gross profits and gross margins for our sales of products and services on our platform. For example, for longer term Subscriptions, we incur shipping and fulfillment expenses fewer times per year than for 30-day Subscriptions. The Subscriber uptake of longer term Subscriptions results in lower recurring costs and higher gross margins as compared to 30-day Subscriptions.

Current wording

We continuously test and optimize the online experience and offerings to improve the customer experience, maximize sales, and improve gross margin. Our Subscribers (sometimes also referred to by us as “members”) select a cadence at which they wish to receive product shipments. In addition to a 30-day cadence, we offer Subscribers the ability to select from a range of Subscription shipment cadences, from every 60 days to 360 days, depending on the product. Subscriptions automatically renew on the applicable cadence selected by the Subscriber when purchasing or updating the Subscription. To ensure timely delivery of prescription medications and in accordance with our terms and conditions, Subscribers may sometimes be charged, and products may sometimes be shipped, earlier than their regularly scheduled cadence to accommodate holidays or for other operational reasons to support continuity of treatment. With the exception of prepaid offerings, the Subscriber is typically billed upon each shipment. Subscribers can cancel Subscriptions in between billing periods to stop receiving additional products and can reactivate Subscriptions at any time. In addition, our customers can purchase product bundles or defined product kits, either consisting of non-prescription over-the-counter products or non-prescription products together with prescription medications, for a single all-inclusive price. Such offerings and their uptake by Subscribers have contributed to the generally stable and predictable nature of our Monthly Online Revenue per Average Subscriber. Additionally, the uptake of these offerings has resulted in higher gross profits and gross margins for our sales of products and services on our platform. For example, for longer term Subscriptions, we incur shipping and fulfillment expenses fewer times per year than for 30-day Subscriptions. The Subscriber uptake of longer term Subscriptions results in lower recurring costs and higher gross margins as compared to 30-day Subscriptions.

Previous wording

Our ability to retain customers is a key factor in our ability to generate revenue. Most of our customers purchase products and services through subscription-based plans, where Subscribers are billed and sent products and/or receive services on a recurring basis. The recurring nature of this revenue provides us with a certain amount of predictability for future revenue if past Subscriber behavior stays relatively consistent in the future. In addition, the consistent uptake by Subscribers of our offerings has contributed to the stable and predictable nature of our Monthly Online Revenue per Average Subscriber. We expect to retain a significant majority of revenue from Subscribers who maintain a Subscription for more than two years (sometimes referred to by us as “long-term revenue retention”). However, if customer behavior changes, or our assumptions regarding long- term revenue retention are incorrect and Subscriber retention decreases in the future, then future revenue will be negatively impacted. Macroeconomic factors including inflation or recessionary pressures may affect the ability of our Subscribers to continue to pay for our products and services, which may also impact the future results of our operations.

Current wording

Our ability to retain customers is a key factor in our ability to generate revenue. Most of our customers purchase products and services through subscription-based plans, where Subscribers are billed and sent products and/or receive services on a recurring basis. The recurring nature of this revenue provides us with a certain amount of predictability for future revenue if past Subscriber behavior stays relatively consistent in the future. In addition, the consistent uptake by Subscribers of our offerings has contributed to the stable and predictable nature of our Monthly Online Revenue per Average Subscriber, though we expect this metric to fluctuate in the near future due to newer offerings. We expect to retain a significant majority of revenue from Subscribers who maintain a Subscription for more than two years (sometimes referred to by us as “long-term revenue retention”). However, if customer behavior changes, or our assumptions regarding long-term revenue retention are incorrect and Subscriber retention decreases in the future, then future revenue will be negatively impacted. Macroeconomic factors including inflation or recessionary pressures may affect the ability of our Subscribers to continue to pay for our products and services, which may also impact the future results of our operations.

Previous wording

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. “Adjusted EBITDA” is defined as net income (loss) before stock-based compensation, depreciation and amortization, income taxes, acquisition and transaction-related costs (which includes (i) consideration paid for employee compensation with vesting requirements incurred directly as a result of acquisitions, inclusive of revaluation of earn-out consideration recorded in general and administrative expenses, and (ii) transaction professional services), impairment of long-lived assets, change in fair value of liabilities, and interest income. “Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by revenue.

Current wording

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. “Adjusted EBITDA” is defined as net income (loss) before stock-based compensation, depreciation and amortization, acquisition and transaction-related costs (which includes (i) consideration paid for employee compensation with vesting requirements incurred directly as a result of acquisitions, inclusive of revaluation of earn-out consideration recorded in general and administrative expenses, and (ii) transaction professional services), income taxes, impairment of long-lived assets, change in fair value of liabilities, and interest income. “Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by revenue.

Previous wording

The following table reconciles net income (loss) to Adjusted EBITDA for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table reconciles net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. We compensate for these limitations by providing specific information regarding the U.S. GAAP items excluded from Adjusted EBITDA. When evaluating our performance, you should consider Adjusted EBITDA in addition to, and not as a substitute for, other financial performance measures, including our net loss and other U.S. GAAP results.

Current wording

Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. We compensate for these limitations by providing specific information regarding the U.S. GAAP items excluded from Adjusted EBITDA. When evaluating our performance, you should consider Adjusted EBITDA in addition to, and not as a substitute for, other financial performance measures, including our net income (loss) and other U.S. GAAP results.

Previous wording

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table reconciles net cash provided by operating activities to Free Cash Flow for the three and six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Flow, you should be aware that in the future we will have cash outflows similar to the adjustments in this presentation. Our presentation of Free Cash Flow should not be construed as an inference that our future results will be unaffected by these cash outflows or any unusual or non-recurring items. When evaluating our performance, you should consider Free Cash Flow in addition to, and not as a substitute for, other financial performance measures, including our net cash provided by operating activities and other U.S. GAAP results.

Current wording

Some of the limitations of Free Cash Flow include (i) Free Cash Flow does not represent our residual cash flow for discretionary expenditures and our non-discretionary commitments, and (ii) Free Cash Flow includes capital expenditures, the benefits of which may be realized in periods subsequent to those in which the expenditures took place. In evaluating Free Cash Flow, you should be aware that in the future we will have cash outflows similar to the adjustments in this presentation. Our presentation of Free Cash Flow should not be construed as an inference that our future results will be unaffected by these cash outflows or any unusual or non-recurring items. When evaluating our performance, you should consider Free Cash Flow in addition to, and not as a substitute for, other financial performance measures, including our net cash provided by operating activities and other U.S. GAAP results.

Previous wording

General and administrative expenses (“G&A”) include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our executive, legal, human resources, finance, brand strategy, and other corporate functions. These expenses also include operating expenses primarily relating to general and administrative functions for insurance, third-party software and hosting to support those functions, related depreciation and amortization, and other general corporate costs. We expect G&A to increase for the foreseeable future as we increase headcount with the growth of our business. However, we anticipate G&A will decrease as a percentage of revenue over the long term, in part due to our expected execution of disciplined headcount growth, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.

Current wording

General and administrative expenses (“G&A”) include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our executive, legal, human resources, finance, brand strategy, communications, public relations, and other corporate functions. These expenses also include operating expenses primarily relating to general and administrative functions for insurance, third-party software and hosting to support those functions, related depreciation and amortization, and other general corporate costs. We expect G&A to increase for the foreseeable future as we increase headcount with the growth of our business. However, we anticipate G&A will decrease as a percentage of revenue over the long term, in part due to our expected execution of disciplined headcount growth, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.

Previous wording

Other income (expense) primarily consists of interest income from our cash and cash equivalents and investment accounts, as well as the change in fair value of liabilities. Additionally, other income (expense) includes non-operating and one-time charges classified outside of operating expenses.

Current wording

Other income (expense) primarily consists of interest income from our cash and cash equivalents and investment accounts, and, in prior years, change in fair value of liabilities. Additionally, other income (expense) includes non-operating and one-time charges classified outside of operating expenses.

Previous wording

Provision for income taxes primarily consists of federal and state taxes, as well as change in valuation allowance. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with our plans and estimates.

Current wording

(Provision) benefit for income taxes primarily consists of federal and state taxes, as well as change in valuation allowance. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with our plans and estimates.

Previous wording

Comparisons for the three months ended March 31, 2024 and 2023

Current wording

Comparisons for the three and six months ended June 30, 2024 and 2023

Previous wording

The following table sets forth our unaudited condensed consolidated statement of operations for the three months ended March 31, 2024 and 2023, and the dollar and percentage change between the two periods (dollars in thousands):

Current wording

The following table sets forth our unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2024 and 2023, and the dollar and percentage change between the two periods (dollars in thousands):

Previous wording

Revenue was $278.2 million for the three months ended March 31, 2024, compared to $190.8 million for the three months ended March 31, 2023, an increase of $87.4 million, or 46%. For a detailed discussion of this increase, refer to “—Revenue and Key Business Metrics.”

Current wording

Revenue was $315.6 million for the three months ended June 30, 2024, compared to $207.9 million for the three months ended June 30, 2023, an increase of $107.7 million, or 52%. Revenue was $593.8 million for the six months ended June 30, 2024, compared to $398.7 million for the six months ended June 30, 2023, an increase of $195.1 million, or 49%. For a detailed discussion of these increases, refer to “—Revenue and Key Business Metrics.”

Previous wording

Cost of revenue was $49.1 million for the three months ended March 31, 2024, compared to $37.3 million for the three months ended March 31, 2023, an increase of $11.7 million, or 31%. This increase was primarily due to increased product and packaging costs of approximately 45%, increased shipping costs of 26%, and increased costs associated with medical consultation services of 14%, compared to the three months ended March 31, 2023. These increases were due to overall increased business activity with the addition of new Subscribers.

Current wording

Cost of revenue was $59.0 million for the three months ended June 30, 2024, compared to $37.8 million for the three months ended June 30, 2023, an increase of $21.3 million, or 56%. This increase was due to increased product and packaging costs of 83%, increased costs associated with medical consultation services of 32%, and increased shipping costs of 28%, compared to the three months ended June 30, 2023. Cost of revenue was $108.1 million for the six months ended June 30, 2024, compared to $75.1 million for the six months ended June 30, 2023, an increase of $33.0 million, or 44%. This increase was primarily due to increased product and packaging costs of approximately 64%, increased shipping costs of 27%, and increased costs associated with medical consultation services of 22%, compared to the six months ended June 30, 2023. The increases in cost of revenue for the three and six months ended June 30, 2024 were due to overall increased business activity with the addition of new Subscribers as well as newer offerings.

Previous wording

Gross profit was $229.1 million for the three months ended March 31, 2024, compared to $153.4 million for the three months ended March 31, 2023, an increase of $75.7 million, or 49%. Correspondingly, gross margin was 82% for the three months ended March 31, 2024, compared to 80% for the three months ended March 31, 2023. The increase in gross margin for the three months ended March 31, 2024 was primarily due to lower costs associated with medical consultation services as a percent of revenue as a result of improving Provider efficiency, synergies gained through increased fulfillment volume, as well as lower shipping costs as a percent of revenue as a result of optimizing costs.

Current wording

Gross profit was $256.6 million for the three months ended June 30, 2024, compared to $170.2 million for the three months ended June 30, 2023, an increase of $86.5 million, or 51%. Correspondingly, gross margin was 81% for the three months ended June 30, 2024, compared to 82% for the three months ended June 30, 2023. Gross profit was $485.7 million for the six months ended June 30, 2024, compared to $323.6 million for the six months ended June 30, 2023, an increase of $162.1 million, or 50%. Correspondingly, gross margin was 82% for the six months ended June 30, 2024, compared to 81% for the six months ended June 30, 2023. A minor decrease in gross margin for the three months ended June 30, 2024 was primarily due to the addition of newer offerings. A minor increase in gross margin for the six months ended June 30, 2024 was primarily due to lower costs associated with medical consultation services as a percent of revenue as a result of improving Provider efficiency, synergies gained through increased fulfillment volume, as well as lower shipping costs as a percent of revenue as a result of optimizing costs. This increase was partially offset by the addition of newer offerings.

Previous wording

Marketing expenses were $130.6 million for the three months ended March 31, 2024, compared to $97.2 million for the three months ended March 31, 2023, an increase of $33.3 million, or 34%. Customer acquisition costs increased to $113.2 million in the three months ended March 31, 2024, compared to $84.0 million for the three months ended March 31, 2023, an increase of $29.2 million. The increase in customer acquisition costs was a result of management’s decision to increase investment in display, search, streaming television, affiliate, and radio and podcast marketing, as we continue to identify opportunities to drive new customer growth.

Current wording

Marketing expenses were $144.9 million for the three months ended June 30, 2024, compared to $107.2 million for the three months ended June 30, 2023, an increase of $37.7 million, or 35%. The most significant component of marketing expenses is customer acquisition costs, which increased to $123.8 million in the three months ended June 30, 2024, compared to $90.0 million for the three months ended June 30, 2023, an increase of $33.8 million. Marketing expenses were $275.5 million for the six months ended June 30, 2024, compared to $204.5 million for the six months ended June 30, 2023, an increase of $71.0 million, or 35%. Customer acquisition costs increased to $237.0 million in the six months ended June 30, 2024, compared to $174.0 million for the six months ended June 30, 2023, an increase of $63.0 million. The increases in customer acquisition costs were a result of management’s decision to increase investment in display, search, streaming television, affiliate, and radio and podcast marketing, as we continue to identify opportunities to drive new customer growth. These increases were partially offset by a decrease in investment in linear television marketing.

Previous wording

General and administrative expenses were $34.6 million for the three months ended March 31, 2024, compared to $30.5 million for the three months ended March 31, 2023, an increase of $4.1 million, or 13%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation of $2.2 million, an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $0.9 million, and an increase in professional services of $0.7 million.

Current wording

General and administrative expenses were $40.6 million for the three months ended June 30, 2024, compared to $31.1 million for the three months ended June 30, 2023, an increase of $9.4 million or 30%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation of $4.3 million, an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $2.0 million, and an increase in professional services of $1.8 million. General and administrative expenses were $75.1 million for the six months ended June 30, 2024, compared to $61.7 million for the six months ended June 30, 2023, an increase of $13.5 million, or 22%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation of $6.6 million, an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $2.9 million, and an increase in professional services of $2.5 million.

Previous wording

Other income was $2.5 million for the three months ended March 31, 2024, compared to $1.6 million for the three months ended March 31, 2023, an increase of $0.9 million. This increase was driven primarily by interest income for the three months ended March 31, 2024 of $2.5 million, compared to $1.9 million for the three months ended March 31, 2023.

Current wording

Other income was $2.4 million for the three months ended June 30, 2024, compared to $2.1 million for the three months ended June 30, 2023, an increase of $0.3 million. The increase was driven primarily by interest income for the three months ended June 30, 2024 of $2.4 million, compared to $2.2 million for the three months ended June 30, 2023. Other income was $4.9 million for the six months ended June 30, 2024, compared to $3.6 million for the six months ended June 30, 2023, an increase of $1.2 million. This increase was driven primarily by interest income for the six months ended June 30, 2024 of $5.0 million, compared to $4.1 million for the six months ended June 30, 2023.

Previous wording

Provision for income taxes was $1.3 million for the three months ended March 31, 2024, compared to $0.4 million for the three months ended March 31, 2023. This change was primarily due to an increase in federal and state income taxes, which were primarily due to the impacts of the valuation allowance placed on our deferred tax assets and current federal and state taxes. We intend to continue maintaining a full valuation allowance on all deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, we believe that, in the foreseeable future, sufficient positive evidence may become available to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are actually able to achieve.

Current wording

Provision for income taxes was $0.1 million for the three months ended June 30, 2024, compared to a benefit for income taxes of less than $0.1 million for the three months ended June 30, 2023. Provision for income taxes was $1.4 million for the six months ended June 30, 2024, compared to $0.4 million for the six months ended June 30, 2023. These changes were primarily due to an increase in current federal and current state income taxes. We intend to continue maintaining a full valuation allowance on all deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, we believe that, in the foreseeable future, sufficient positive evidence may become available to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense, and corresponding one-time increase to net income, for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are actually able to achieve.

Previous wording

As of March 31, 2024, our principal sources of liquidity are cash and cash equivalents in the amount of $105.2 million, which are primarily invested in interest-bearing cash accounts and money market funds, and investments in the amount of $98.4 million, which are invested in U.S. Treasury bills, corporate bonds, government and government agency securities, and asset-backed bonds.

Current wording

As of June 30, 2024, our principal sources of liquidity are cash and cash equivalents in the amount of $129.3 million, which are primarily invested in interest-bearing cash accounts and money market funds, and investments in the amount of $98.0 million, which are invested in U.S. Treasury bills, corporate bonds, government and government agency securities, and asset-backed bonds.

Previous wording

We have historically incurred significant losses from operations. While we had income from operations for the three months ended March 31, 2024, similar performance in the near future is not certain due to the continued investments we are making in our business. We believe our existing cash resources are sufficient to support planned operations for the next 12 months. As a result, management believes that our current financial resources are sufficient to continue operating activities for at least one year past the issuance date of the unaudited condensed consolidated financial statements.

Current wording

Prior to 2024, we historically incurred significant losses from operations. While we had income from operations for the three and six months ended June 30, 2024, similar performance in the near future is not certain due to the continued investments we are making in our business. We believe our existing cash resources are sufficient to support planned operations for the next 12 months. As a result, management believes that our current financial resources are sufficient to continue operating activities for at least one year past the issuance date of the unaudited condensed consolidated financial statements.

Previous wording

Our future capital requirements will depend on many factors, including the number of orders we receive, the size of our customer base, the continuing market acceptance of telehealth, and the timing and extent of spend to support the expansion of sales, marketing, development activities, and our facilities, which may be impacted by inflationary, recessionary, or other macroeconomic factors. We expect to continue to pursue opportunities to expand our internal fulfillment capabilities and may acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. We may also use our cash and cash equivalents to repurchase up to an additional $19.9 million of our Class A common stock through the fourth quarter of 2025 at management’s discretion pursuant to our share repurchase program. We have based our estimate of our future capital requirements on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise or access additional capital when desired, our business, financial condition, and results of operations would be harmed.

Current wording

Our future capital requirements will depend on many factors, including the number of orders we receive, the size of our customer base, the continuing market acceptance of telehealth, and the timing and extent of spend to support the expansion of sales, marketing, development activities, and our facilities, which may be impacted by inflationary, recessionary, or other macroeconomic factors. We expect to continue to pursue opportunities to expand our internal fulfillment capabilities and may acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. We may also use our cash and cash equivalents to repurchase up to $100 million of our Class A common stock through August 31, 2027 at management’s discretion pursuant to our new share repurchase program. We have based our estimate of our future capital requirements on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise or access additional capital when desired, our business, financial condition, and results of operations would be harmed.

Previous wording

Net cash provided by operating activities was $25.8 million for the three months ended March 31, 2024. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $19.0 million, net income of $11.1 million, and depreciation and amortization of $3.0 million, partially offset by net accretion on securities of $1.1 million. In addition, a net cash outflow totaling $7.3 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in inventory of $7.4 million, an increase in prepaid expenses and other current assets of $6.7 million, and a decrease in accrued liabilities of $2.3 million. This outflow was partially offset by an increase in deferred revenue of $6.0 million and an increase in accounts payable of $3.6 million.

Current wording

Net cash provided by operating activities was $79.4 million for the six months ended June 30, 2024. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $43.1 million, net income of $24.4 million, and depreciation and amortization of $6.6 million, partially offset by net accretion on securities of $2.3 million. In addition, a net cash inflow totaling $5.8 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in accounts payable of $16.2 million and an increase in deferred revenue of $13.3 million. This inflow was partially offset by an increase in inventory of $18.1 million and a decrease in earn-out payable of $2.8 million.

Previous wording

Net cash provided by operating activities was $9.5 million for the three months ended March 31, 2023. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $14.2 million and depreciation and amortization of $2.1 million, partially offset by a net loss of $10.1 million and net accretion on securities of $1.0 million. In addition, a net cash inflow totaling $2.4 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in accounts payable and accrued liabilities of $5.6 million and an increase in deferred revenue of $1.4 million. This inflow was partially offset by an increase in prepaid expenses and other current assets of $5.0 million.

Current wording

Net cash provided by operating activities was $26.3 million for the six months ended June 30, 2023. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $31.0 million, depreciation and amortization of $4.5 million, and non-cash acquisition-related costs of $1.1 million, partially offset by a net loss of $17.2 million and net accretion on securities of $2.5 million. In addition, a net cash inflow totaling $7.6 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in accounts payable and accrued liabilities of $12.6 million. This inflow was partially offset by an increase in prepaid expenses and other current assets of $4.8 million.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2024 was $13.0 million, which was primarily due to net investment cash inflows of $27.0 million. This cash inflow was partially offset by $10.6 million in purchases of property, equipment, and intangible assets and investments of $3.4 million in website development and internal-use software.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2024 was $8.6 million, which was primarily due to net investment cash inflows of $28.6 million. This cash inflow was partially offset by $13.8 million in purchases of property, equipment, and intangible assets and investments of $6.2 million in website development and internal-use software.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2023 was $4.1 million, which was due to investments of $1.9 million in website development and internal-use software, net investment cash outflows of $1.6 million, and $0.6 million in purchases of property, equipment, and intangible assets.

Current wording

Net cash used in investing activities for the six months ended June 30, 2023 was $1.7 million, which was due to investments of $5.3 million in purchases of property, equipment, and intangible assets and $4.1 million in website development and internal-use software. This cash outflow was partially offset by net investment cash inflows of $7.6 million.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2024 was $30.3 million, which was primarily due to repurchases of our Class A common stock of $28.1 million and payments for taxes related to net share settlement of equity awards of $7.3 million. This cash outflow was partially offset by proceeds from the exercise of stock options of $5.1 million.

Current wording

Net cash used in financing activities for the six months ended June 30, 2024 was $55.4 million, which was primarily due to repurchases of our Class A common stock of $48.0 million, payments for taxes related to net share settlement of equity awards of $22.3 million, and payments for acquisition-related earn-out consideration of $3.2 million. This cash outflow was partially offset by proceeds from the exercise of stock options of $16.5 million and proceeds from employee stock purchase plan of $1.6 million.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2023 was $3.4 million, which was primarily due to payments for taxes related to net share settlement of equity awards of $3.7 million. This cash outflow was partially offset by proceeds from the exercise of stock options of $0.2 million.

Current wording

Net cash used in financing activities for the six months ended June 30, 2023 was $6.0 million, which was primarily due to payments for taxes related to net share settlement of equity awards of $7.4 million. This cash outflow was partially offset by proceeds from employee stock purchase plan of $0.9 million and proceeds from the exercise of stock options of $0.6 million.

Previous wording

Our contractual obligations and commitments include earn-out payable related to an acquisition, operating leases, and non-cancelable purchase obligations primarily related to cloud-based software contracts used in operations. Total contractual obligations and commitments as of March 31, 2024 were $28.7 million, of which $13.9 million was payable within 12 months.

Current wording

Our contractual obligations and commitments include operating leases and non-cancelable purchase obligations primarily related to cloud-based software contracts used in operations. Total contractual obligations and commitments as of June 30, 2024 were $20.4 million, of which $6.9 million was payable within 12 months.

Previous wording

For a discussion of our critical accounting estimates, please refer to Item 7 under Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report for the year ended December 31, 2023. Since December 31, 2023, there have been no material changes to our critical accounting estimates.

Current wording

For a discussion of our critical accounting estimates, please refer to Item 7 under Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report for the year ended December 31, 2023. Since December 31, 2023, there have been no material changes to our critical accounting estimates, other than income taxes described below.