Hims Hers Health Inc

Previous wording

Our management monitors two financial results, Online Revenue and Wholesale Revenue (both defined below), to track our total revenue generation. We also monitor the additional key business metrics set forth below to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. Increases or decreases in these key business metrics may not correspond with increases or decreases in our revenue.

Current wording

Our management monitors two financial results, Online Revenue and Wholesale Revenue (both defined below), to track our total revenue generation. We also monitor the additional key business metrics set forth below to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. Increases or decreases in these key business metrics may not correspond with increases or decreases in our revenue. We also continually and strategically review our key business metrics to ensure that they are helpful in managing or monitoring the performance of our business as it grows, which may result in changes in our key business metrics over time.

Previous 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):

Current wording

The table below provides a breakdown of total revenue between Online Revenue and Wholesale Revenue, for the three and nine months ended September 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 $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.

Current wording

We generated $392.6 million in Online Revenue for the three months ended September 30, 2024, an increase of $172.9 million, or 79%, as compared to $219.7 million for the three months ended September 30, 2023. We generated $967.2 million in Online Revenue for the nine months ended September 30, 2024, an increase of $362.2 million, or 60%, as compared to $605.0 million for the nine months ended September 30, 2023. Growth in Online Revenue for the three and nine months ended September 30, 2024 was primarily driven by offerings launched after September 30, 2023, which led to growth in new Subscribers, Monthly Online Revenue per Average Subscriber, AOV, and Net Orders, along with continued growth in Subscribers pertaining to offerings available in all periods presented, from whom we generated recurring revenue.

Previous 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.

Current wording

We generated $9.0 million in Wholesale Revenue for the three months ended September 30, 2024, an increase of $1.9 million, or 28%, as compared to $7.0 million for the three months ended September 30, 2023. We generated $28.2 million in Wholesale Revenue for the nine months ended September 30, 2024, an increase of $7.8 million, or 38% as compared to $20.4 million for the nine months ended September 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 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.

Current wording

Subscribers grew 44% to approximately 2.0 million as of September 30, 2024 as compared to approximately 1.4 million Subscribers as of September 30, 2023. Growth in Subscribers was primarily driven by offerings launched after September 30, 2023, along with increased traffic to our platform (through our websites and mobile applications) as a result of our marketing activities and improved onsite and customer onboarding experiences. Monthly Online Revenue per Average Subscriber increased $13 to $67 for the three months ended September 30, 2024 as compared to $54 for the three months ended September 30, 2023. Monthly Online Revenue per Average Subscriber increased $5 to $60 for the nine months ended September 30, 2024 as compared to $55 for the nine months ended September 30, 2023. These increases were primarily due to newer offerings introduced during the second quarter of 2024 along with changes in product mix.

Previous 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.

Current wording

As a result of growth in Subscribers, we generated approximately 2.7 million Net Orders for the three months ended September 30, 2024, an increase of 20% as compared to approximately 2.2 million Net Orders for the three months ended September 30, 2023. We generated approximately 7.7 million Net Orders for the nine months ended September 30, 2024, an increase of 20% as compared to approximately 6.4 million Net Orders for the nine months ended September 30, 2023. For the three months ended September 30, 2024, AOV was $147, an increase of 48% as compared to $99 for the three months ended September 30, 2023. For the nine months ended September 30, 2024, AOV was $126, an increase of 33% as compared to $95 for the nine months ended September 30, 2023. AOV growth for the three and nine months ended September 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. 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.

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 or pause 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. 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 typically results in lower recurring costs and higher gross margins as compared to 30-day Subscriptions.

Previous wording

Our ability to attract new customers is a key factor for our future growth. To date, we have successfully acquired new customers through marketing and the development of our brands as well as through acquisitions. As a result, revenue has increased each year since our launch. If we are unable to acquire enough new customers in the future, revenue might decline. New customer acquisition could be negatively impacted if our marketing efforts are less effective in the future. Increases in advertising rates could also negatively impact our ability to acquire new customers. Consumer tastes, preferences, and sentiment for our brands may also change and result in decreased demand for our products and services. Changes in law or regulatory enforcement could also negatively impact our ability to acquire new customers, including changes to privacy, healthcare, or other laws that could impact customer acquisition costs.

Current wording

Our ability to attract new customers is a key factor for our future growth. To date, we have successfully acquired new customers through marketing and the development of our brands as well as through acquisitions. As a result, revenue has increased each year since our launch. If we are unable to acquire enough new customers in the future, revenue might decline. New customer acquisition could be negatively impacted if our marketing efforts are less effective in the future. Increases in advertising rates could also negatively impact our ability to acquire new customers. Consumer tastes, preferences, and sentiment for our brands may also change and result in decreased demand for our products and services. Changes in the legal or regulatory environment could also negatively impact our ability to acquire new customers, including changes to privacy, healthcare, or other laws that could impact customer acquisition costs.

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, 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.

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. While historically the consistent uptake by Subscribers of our offerings contributed to the stable and predictable nature of our Monthly Online Revenue per Average Subscriber, newer offerings from the second quarter of 2024 have led to increases in this metric, which may continue in the near future. 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

We expect to continue to focus on long-term growth. We intend to continue to invest in our fulfillment and operating capabilities, including our Affiliated Pharmacies (as defined below) and warehousing facilities, with the goal of fulfilling nearly all of our pharmaceutical and over-the-counter customer orders through affiliated and internal fulfillment capabilities. For example, we are making investments in the expansion of our current facilities, which are expected to continue for at least the next 12 months. Additionally, we expect to continue to make significant investments in marketing to acquire new customers and we expect to continue to make investments in product offerings and customer experience. We are working to enhance our offerings and expand the breadth of health and wellness products and services offered on our websites and mobile applications. This includes investments in personalized product offerings, including in our compounding capabilities. This also includes further investments in and development of mobile phone technology, including our mobile applications, in order to improve the customer experience on our platform. In the short term, we expect these investments to increase our operating expenses; however, in the long term, we anticipate that these investments will positively impact our results of operations. If we are unsuccessful at improving our offerings or are unable to generate additional demand for our offerings, we may not recover the financial investments we make into the business and revenue may not increase in the future.

Current wording

We expect to continue to focus on long-term growth. We intend to continue to invest in our manufacturing, fulfillment, and operating capabilities, including our Affiliated Pharmacies (as defined below) and warehousing facilities, with the goal of fulfilling nearly all of our pharmaceutical and over-the-counter customer orders through affiliated and internal fulfillment capabilities. For example, we are making investments in the expansion of our current facilities, which are expected to continue for at least the next 12 months. Additionally, we expect to continue to make significant investments in marketing to acquire new customers and we expect to continue to make investments in product offerings and customer experience. We are working to enhance our offerings and expand the breadth of health and wellness products and services offered on our websites and mobile applications. This includes investments in personalized product offerings, including in our compounding capabilities. This also includes further investments in and development of mobile phone technology, including our mobile applications, in order to improve the customer experience on our platform. We may continue to pursue opportunities to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. In the short term, we expect these investments to increase our operating expenses; however, in the long term, we anticipate that these investments will positively impact our results of operations. If we are unsuccessful at improving our offerings or are unable to generate additional demand for our offerings, we may not recover the financial investments we make into the business and revenue may not increase in the future.

Previous wording

We expect to continue to expand into new health and wellness specialties with our offerings. Specialty expansion allows us to increase the number of health and wellness consumers for whom we can provide products and services. It also allows us to offer access to treatment of additional conditions that may already affect our current customers. Expanding into new health and wellness specialties has required and will continue to require financial investments in additional headcount, marketing and customer acquisition costs, additional operational capabilities, and may require the purchase of new inventory. If we are unable to generate sufficient demand in new health and wellness specialties, we may not recover the financial investments we make into new specialties and revenue may not increase in the future.

Current wording

We expect to continue to expand into new health and wellness specialties with our offerings. Specialty expansion allows us to increase the number of health and wellness consumers for whom we can provide products and services. It also allows us to offer access to treatment of additional conditions that may already affect our current customers. Expanding into new health and wellness specialties has required and will continue to require financial investments in additional headcount, marketing and customer acquisition costs, additional operational capabilities, and may require the purchase of new inventory. If we are unable to generate or maintain sufficient demand in new health and wellness specialties, we may not recover the financial investments we make into new specialties and revenue may not increase in the future.

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, 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.

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), impairment of long-lived assets, change in fair value of liabilities, interest income, and income taxes. “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 and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

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

Previous 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):

Current wording

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

Previous wording

Operations and support expenses include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our supply chain, retail, medical group, pharmacy, fulfillment, and customer service functions. These expenses also include operating expenses primarily relating to operating and support functions for facilities, warehousing and fulfillment, payment processing, third-party software and hosting to support those functions, and related depreciation. We expect operations and support expenses to increase for the foreseeable future as we continue to invest in our fulfillment and operating capabilities and grow our business. However, we anticipate operations and support expenses will decrease as a percentage of revenue over the long term, 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

Operations and support expenses include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our supply chain, retail, medical group, pharmacy, fulfillment, and customer service functions. These expenses also include operating expenses primarily relating to operating and support functions for facilities, warehousing and storage, fulfillment, payment processing, third-party software and hosting to support those functions, and related depreciation and amortization. We expect operations and support expenses to increase for the foreseeable future as we continue to invest in our fulfillment and operating capabilities and grow our business. However, we anticipate operations and support expenses will decrease as a percentage of revenue over the long term, 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

(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.

Current wording

Benefit (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. If and when we conclude that we are more likely than not to utilize some or all of our deferred tax assets, we release some or all of our valuation allowance and our tax provision will decrease in the period in which we make such determination, which will cause a corresponding one-time increase to net income.

Previous 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):

Current wording

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

Previous 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.”

Current wording

Revenue was $401.6 million for the three months ended September 30, 2024, compared to $226.7 million for the three months ended September 30, 2023, an increase of $174.9 million, or 77%. Revenue was $995.4 million for the nine months ended September 30, 2024, compared to $625.4 million for the nine months ended September 30, 2023, an increase of $370.0 million, or 59%. For a detailed discussion of these increases, refer to “—Revenue and Key Business Metrics.”

Previous 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.

Current wording

Cost of revenue was $83.7 million for the three months ended September 30, 2024, compared to $39.4 million for the three months ended September 30, 2023, an increase of $44.3 million, or 112%. This increase was due to increased product and packaging costs of 182%, increased shipping costs of 49%, and increased costs associated with medical consultation services of 45%, compared to the three months ended September 30, 2023. Cost of revenue was $191.8 million for the nine months ended September 30, 2024, compared to $114.5 million for the nine months ended September 30, 2023, an increase of $77.3 million, or 68%. This increase was primarily due to increased product and packaging costs of approximately 105%, increased shipping costs of 35%, and increased costs associated with medical consultation services of 30%, compared to the nine months ended September 30, 2023. The increases in cost of revenue for the three and nine months ended September 30, 2024 were primarily due to newer offerings as well as overall increased business activity with the addition of new Subscribers.

Previous 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.

Current wording

Gross profit was $317.9 million for the three months ended September 30, 2024, compared to $187.3 million for the three months ended September 30, 2023, an increase of $130.6 million, or 70%. Correspondingly, gross margin was 79% for the three months ended September 30, 2024, compared to 83% for the three months ended September 30, 2023. Gross profit was $803.6 million for the nine months ended September 30, 2024, compared to $510.9 million for the nine months ended September 30, 2023, an increase of $292.7 million, or 57%. Correspondingly, gross margin was 81% for the nine months ended September 30, 2024, compared to 82% for the nine months ended September 30, 2023. The decreases in gross margin were primarily due to the addition of newer offerings. These decreases were partially offset by 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.

Previous 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.

Current wording

Marketing expenses were $182.3 million for the three months ended September 30, 2024, compared to $116.1 million for the three months ended September 30, 2023, an increase of $66.2 million, or 57%. The most significant component of marketing expenses is customer acquisition costs, which increased to $160.7 million in the three months ended September 30, 2024, compared to $98.6 million for the three months ended September 30, 2023, an increase of $62.1 million. Marketing expenses were $457.8 million for the nine months ended September 30, 2024, compared to $320.5 million for the nine months ended September 30, 2023, an increase of $137.2 million, or 43%. Customer acquisition costs increased to $397.7 million in the nine months ended September 30, 2024, compared to $272.6 million for the nine months ended September 30, 2023, an increase of $125.1 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.

Previous wording

Operations and support expenses were $41.5 million for the three months ended June 30, 2024, compared to $29.2 million for the three months ended June 30, 2023, an increase of $12.2 million or 42%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses and excluding stock-based compensation) of $5.7 million, an increase in order fulfillment, transaction processing, and selling costs of $2.7 million, an increase in professional services of $1.3 million, and an increase in depreciation, amortization, and technology costs relating to operations and support functions of $1.2 million. Operations and support expenses were $80.2 million for the six months ended June 30, 2024, compared to $55.4 million for the six months ended June 30, 2023, an increase of $24.8 million or 45%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $12.7 million, an increase in order fulfillment, transaction processing, and selling costs of $4.1 million, an increase in professional services of $2.1 million, an increase in depreciation, amortization, and technology costs of $2.1 million, and an increase in stock-based compensation of $1.8 million.

Current wording

Operations and support expenses were $47.5 million for the three months ended September 30, 2024, compared to $31.6 million for the three months ended September 30, 2023, an increase of $15.9 million or 50%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses and excluding stock-based compensation) of $5.4 million, an increase in order fulfillment, transaction processing, and selling costs of $4.1 million, an increase in professional services of $2.6 million, and an increase in depreciation, amortization, and technology costs relating to operations and support functions of $1.7 million. Operations and support expenses were $127.7 million for the nine months ended September 30, 2024, compared to $87.0 million for the nine months ended September 30, 2023, an increase of $40.7 million or 47%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $18.2 million, an increase in order fulfillment, transaction processing, and selling costs of $8.4 million, an increase in professional services of $4.7 million, an increase in depreciation, amortization, and technology costs relating to operations and support functions of $3.8 million, and an increase in stock-based compensation of $2.6 million.

Previous wording

Technology and development expenses were $18.7 million for the three months ended June 30, 2024, compared to $11.8 million for the three months ended June 30, 2023, an increase of $6.9 million or 58%. The increase in technology and development expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $3.0 million, an increase in depreciation, amortization, and technology costs of $1.8 million, and an increase in stock-based compensation of $1.1 million. Technology and development expenses were $34.0 million for the six months ended June 30, 2024, compared to $22.6 million for the six months ended June 30, 2023, an increase of $11.4 million or 51%. The increase in technology and development expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $5.5 million, an increase in depreciation, amortization, and technology costs of $3.4 million, and an increase in stock-based compensation of $1.8 million.

Current wording

Technology and development expenses were $21.1 million for the three months ended September 30, 2024, compared to $12.3 million for the three months ended September 30, 2023, an increase of $8.8 million or 72%. The increase in technology and development expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $4.4 million, an increase in depreciation, amortization, and technology costs of $1.9 million, and an increase in stock-based compensation of $1.7 million. Technology and development expenses were $55.1 million for the nine months ended September 30, 2024, compared to $34.8 million for the nine months ended September 30, 2023, an increase of $20.2 million or 58%. The increase in technology and development expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $10.0 million, an increase in depreciation, amortization, and technology costs of $5.2 million, and an increase in stock-based compensation of $3.5 million.

Previous 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.

Current wording

General and administrative expenses were $44.6 million for the three months ended September 30, 2024, compared to $35.9 million for the three months ended September 30, 2023, an increase of $8.7 million or 24%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation of $4.2 million and an increase in professional services of $2.3 million. General and administrative expenses were $119.7 million for the nine months ended September 30, 2024, compared to $97.6 million for the nine months ended September 30, 2023, an increase of $22.2 million, or 23%. The increase in general and administrative expenses was primarily driven by an increase in stock-based compensation of $10.8 million, an increase in professional services of $4.8 million, an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $3.5 million, and an increase in depreciation, amortization, and technology costs relating to general and administrative functions of $1.1 million.

Previous 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.

Current wording

Other income was $1.2 million for the three months ended September 30, 2024, compared to $1.6 million for the three months ended September 30, 2023, a decrease of $0.4 million. The decrease was driven primarily by an expense related to a one-time corporate matter. Other income was $6.1 million for the nine months ended September 30, 2024, compared to $5.3 million for the nine months ended September 30, 2023, an increase of $0.8 million. This increase was driven primarily by interest income for the nine months ended September 30, 2024 of $7.6 million, compared to $6.4 million for the nine months ended September 30, 2023.

Previous 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.

Current wording

Benefit for income taxes was $52.0 million for the three months ended September 30, 2024, compared to a provision for income taxes of $0.7 million for the three months ended September 30, 2023. Benefit for income taxes was $50.6 million for the nine months ended September 30, 2024, compared to $1.0 million for the nine months ended September 30, 2023. These changes were primarily due to a release of $60.8 million of our valuation allowance on our domestic deferred tax assets during thethree months ended September 30, 2024, partially offset by taxes on current year income. The release of the valuation allowance resulted in the recognition of certain deferred tax assets, a decrease to income tax expense, and a corresponding one-time increase to net income for the three and nine months ended September 30, 2024.

Previous 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.

Current wording

As of September 30, 2024, our principal sources of liquidity are cash and cash equivalents in the amount of $165.5 million, which are primarily invested in interest-bearing cash accounts and money market funds, and investments in the amount of $88.6 million, which are invested in U.S. Treasury bills, corporate bonds, and government and government agency securities.

Previous wording

During the six months ended June 30, 2024, we made cash payments for the earn-out payable for Honest Health Limited, which is now Hims & Hers UK Limited (“HHL”), totaling $6.0 million, with such payment amounts determined in fiscal year 2023 in accordance with the terms of the related acquisition agreement. The HHL earn-out payments totaling $6.0 million are recorded: (i) $2.8 million within operating activities; and (ii) $3.2 million within financing activities on the condensed consolidated statements of cash flows. The total earn-out payment also included shares of our Class A common stock. No further earn-out payables are due under the HHL acquisition agreement.

Current wording

During the nine months ended September 30, 2024, we made cash payments for the earn-out payable for Honest Health Limited, which is now Hims & Hers UK Limited (“HHL”), totaling $6.0 million, with such payment amounts determined in fiscal year 2023 in accordance with the terms of the related acquisition agreement. The HHL earn-out payments totaling $6.0 million are recorded: (i) $2.8 million within operating activities; and (ii) $3.2 million within financing activities on the unaudited condensed consolidated statements of cash flows. The total earn-out payment also included shares of our Class A common stock. No further earn-out payables are due under the HHL acquisition agreement.

Previous wording

In July 2024, we executed a purchase agreement to acquire all membership interests of a 503B compounding outsourcing facility registered with the Food and Drug Administration and located in the United States, for total cash and stock consideration of approximately$31.0 million. Closing may occur prior to the end of 2024 and is subject to certain conditions pursuant to the purchase agreement, including certain regulatory approvals.

Current wording

In September 2024, we satisfied all closing conditions of the executed purchase agreement to acquire all of the membership interests of Seaview Enterprises LLC (d/b/a MedisourceRx) (“MedisourceRx”), a 503B compounding outsourcing facility registered with the Food and Drug Administration and located in the United States, for total cash and stock consideration of approximately $31.0 million, including cash payments of $15.5 million and Class A common stock of $15.5 million. The cash payments, net of cash acquired, are included within investing activities on the unaudited condensed consolidated statements of cash flows.

Previous 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.

Current wording

Prior to 2024, we historically incurred significant losses from operations. While we had income from operations for the three and nine months ended September 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 $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.

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, supply chain, or other macroeconomic factors. We expect to continue to pursue opportunities to expand our manufacturing and internal fulfillment capabilities and may acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. From time to time, we order inventory with sufficient lead time in order to ensure our ability to fulfill customer demand for supply chain, seasonality, or other reasons, which may have an impact on our cash and cash equivalents in a given quarter. We may also use our cash and cash equivalents to repurchase up to $70.0 million of our Class A common stock through August 31, 2027 at management’s discretion pursuant to our 2024 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 $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.

Current wording

Net cash provided by operating activities was $164.7 million for the nine months ended September 30, 2024. Net cash provided by operating activities included net income of $100.0 million, non-cash expense related to stock-based compensation of $68.0 million, and depreciation and amortization of $11.0 million, partially offset by benefit for deferred taxes of $54.3 million and net accretion on securities of $3.4 million. In addition, a net cash inflow totaling $41.0 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in accounts payable and accrued liabilities of $49.1 million and an increase in deferred revenue of $24.5 million. This inflow was partially offset by an increase in inventory of $26.3 million, a decrease in earn-out payable of $2.8 million, and an increase in prepaid expenses and other current assets of $1.5 million.

Previous 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.

Current wording

Net cash provided by operating activities was $51.5 million for the nine months ended September 30, 2023. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $48.3 million, depreciation and amortization of $6.9 million, non-cash acquisition-related costs of $2.3 million, and change in fair value of liabilities of $1.1 million, partially offset by a net loss of $24.8 million and net accretion on securities of $4.0 million. In addition, a net cash inflow totaling $20.0 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in accounts payable and accrued liabilities of $19.3 million and an increase in deferred revenue of $2.9 million.

Previous wording

Cash flows from investing activities primarily relate to our treasury operations of investing in available-for-sale investments, as well as investment in website development and internal-use software and purchases of property, equipment, and intangible assets.

Current wording

Cash flows from investing activities primarily relate to our treasury operations of investing in available-for-sale investments and acquisitions, as well as investment in website development and internal-use software and purchases of property, equipment, and intangible assets.

Previous 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.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $1.8 million, which was primarily due to $17.1 million in purchases of property, equipment, and intangible assets, $15.4 million for the acquisition of MedisourceRx, net of cash acquired, and investments of $8.7 million in website development and internal-use software. This cash outflow was partially offset by net investment cash inflows of $39.4 million.

Previous 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.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2023 was $32.8 million, which was due to net investment cash outflows of $17.5 million, investments of $8.6 million in purchases of property, equipment, and intangible assets, and $6.7 million in website development and internal-use software.

Previous 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.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2024 was $94.2 million, which was primarily due to repurchases of our Class A common stock of $78.0 million, payments for taxes related to net share settlement of equity awards of $33.1 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 $18.5 million and proceeds from employee stock purchase plan of $1.6 million.

Previous 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.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2023 was $7.5 million, which was primarily due to payments for taxes related to net share settlement of equity awards of $10.1 million. This cash outflow was partially offset by proceeds from the exercise of stock options of $1.7 million.

Previous 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.

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 September 30, 2024 were $38.0 million, of which $11.3 million was payable within 12 months.