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SAN FRANCISCO - Hims & Hers Health, Inc. (NYSE: HIMS), a leading health and wellness platform, announced its plan to offer $450 million of convertible senior notes due 2030 in a private offering aimed at qualified institutional buyers. The company also may allow the purchase of up to an additional $67.5 million in notes within 13 days of issuance.
The proceeds are earmarked for corporate purposes to accelerate global expansion, both organically and through strategic acquisitions, although no definitive agreements for acquisitions are currently in place. This expansion comes at a time when the company shows robust financial metrics, with InvestingPro analysis indicating a healthy gross profit margin of 77% and strong return on assets of 24.5%. Newly appointed CTO Mo Elshenawy will oversee investments in AI and diagnostics to advance personalized treatments and improve the consumer healthcare experience. Part of the funds will also cover the cost of capped call transactions intended to minimize potential dilution or cash payments upon note conversion.
The notes, which will be senior and unsecured, will mature on May 15, 2030, unless repurchased, redeemed, or converted earlier. Interest will be paid semi-annually, and Hims & Hers will have the option to redeem the notes for cash under certain conditions starting May 19, 2028. Noteholders can convert their notes in certain circumstances, and Hims & Hers can choose to settle conversions with cash, shares of its Class A common stock, or a combination.
In the event of specific corporate changes, noteholders may require Hims & Hers to repurchase their notes at the principal amount plus accrued interest. The interest rate and initial conversion rate for the notes will be determined at the time of pricing.
Hims & Hers also plans to enter into capped call transactions, which are expected to reduce potential stock dilution or cash payments upon note conversion, subject to a cap. These transactions may affect the market price of the company’s Class A common stock or the notes.
The offering and any shares of Class A common stock issuable upon conversion of the notes have not been registered under the Securities Act or any other securities laws and will only be offered pursuant to an exemption from registration requirements.
This move comes as part of Hims & Hers’ mission to expand access to high-quality, personalized healthcare. The information in this article is based on a press release statement.
In other recent news, Hims & Hers Health reported a strong first quarter, surpassing earnings expectations and maintaining its full-year sales outlook. Despite the positive earnings report, the company has faced a cautious response from investors, as noted by Piper Sandler, which raised its price target to $39 while keeping a Neutral rating. BofA Securities also adjusted its outlook on Hims & Hers, increasing the price target to $28 and retaining an Underperform rating, citing potential financial trajectories and litigation risks associated with expanding their semaglutide business. Meanwhile, TD Cowen raised its price target to $38, maintaining a Hold rating, while expressing caution about the company’s ability to consistently outperform financially amid increasing competition in the telehealth sector. In a strategic move, Hims & Hers appointed Mo Elshenawy as Chief Technology Officer to enhance AI integration in its healthcare services, reflecting its ongoing investment in technology. Elshenawy brings over two decades of experience in AI and infrastructure, previously serving as President and CTO at Cruise. His leadership is expected to support the company’s vision of providing personalized and accessible healthcare. These developments highlight the company’s efforts to innovate and adapt in a challenging macroeconomic environment.
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