The company makes most of its money selling prescription drugs for sexual health
While special purpose acquisition companies (SPACs) have suddenly become a means for all types of companies to go public this year, they have become especially popular in the healthcare sector.
It was already assumed that 2021 would be the year of Healthtech’s initial public offering, and the emergence of SPACs as a viable means of going public could drive up the number of companies entering the market: there is already speculation that healthcare IPOs will take place increased 10% in 2021, while M&A activity could increase 35% and reverse mergers, which include SPAC deals, could increase 47%.
SPACs are an alternative way for companies to enter the public market without going through a traditional IPO. Basically, a Shell company is set up that goes through an IPO; It then acquires an established company so it can take over the stock. This allows companies to go public faster without the need for a month-long roadshow. There are at least 53 SPACs actively seeking target companies in the health and life science industries, and a number of companies have already embarked on this path or announced they will, including Ambulnz, Clover Health, Science 37, Sharecare, Talkspace, and 23 & Me.
One of the largest health tech companies going public via SPAC is the e-commerce wellness brand Hims & Hers.
What is Hims & Hers?
Founded in 2017, Hims & Hers offers a subscription-based model that enables patients to treat conditions related to skin care, sexual health, hair loss, and mental health. The patients are connected to a doctor via their telehealth platform, who then sends prescriptions to the patient’s door without a delivery fee.
“To fulfill our mission to make healthcare accessible, affordable and convenient for everyone, we offer a range of health and wellness products and services that can be purchased directly by our customers on our websites. Our offerings are focused in the Generally on chronic conditions, in which treatment typically plays a role, recurring prescription drugs and ongoing care from health care providers, “the company wrote in its filing with the SEC.
“Most of the offerings on our sites are sold to customers on a subscription basis. Subscription plans provide an easy and convenient way for customers to get the ongoing treatment they need while providing the business with predictability through recurring revenue streams.”
With subscriptions, customers can determine how often they receive products, every month to every two to twelve months, depending on the product.
A subscription fee for Hims or Hers is usually between $ 20 and $ 30 per month, and patients pay everything out of their own pocket. The company doesn’t accept insurance, but says its products are “50-80% off the retail price, making them more affordable and accessible to consumers”.
Slump in sales
The company divides its sales into two categories: online sales and wholesale sales.
Online sales represent the sale of products and services on the Hims and Hers platform, either through subscriptions or by people purchasing individual products. In the fourth quarter of 2020, online sales were $ 40 million, representing 96.7 percent of the company’s total revenue of $ 41.5 million.
Wholesale sales, which represent “non-prescription product sales to retailers through wholesale purchase agreements,” were nearly $ 1.4 million, or 3.3 percent of total sales.
Broken down by category, the majority of Hims & Hers sales are in products related to sexual health, with 57% in hair, dermatology and other products. The other 7% come from wholesale.
The vast majority of the products the company sells are prescription drugs versus non-prescription drugs, including nutritional supplements, vitamins, and hair care treatments, which make up only 10% of sales.A publicly traded company
Hims & Hers announced that in October 2020, as part of a SPAC merger with Oaktree Acquisition Corp. will go public.
The transaction, which closed on January 20, 2021, valued Hims & Hers at approximately $ 1.6 billion and raised $ 280 million, including $ 205 million in Oaktree cash and a concurrent private placement (PIPE ) of $ 75 million of institutional common stock to investors, including funds managed by Franklin Templeton and certain Oaktree clients.
The stock, which debuted at $ 17.13 per share, closed at $ 8.97 on Thursday, a 48 percent decline.
Before going public, Hims & Hers had from investors like DCM Ventures, 7 Global Capital, Counterpart Advisors, Redpoint, 8VC, Gründerfonds, Kyle Widrick, Maverick Ventures, Forerunner Ventures, Thrive Capital, IVP SV Angel, UpHonest Capital, Wei Guo, Gin Lane , Cherubic Ventures and Atomic.