Hims & Hers bulks up with US$450m convert financing
Hims & Hers is going on the offensive with a planned US$450m raise from the sale of a convertible bond that takes advantage of its surging share price.
Morgan Stanley and JP Morgan tightened price talk on the five-year CB midday Thursday to a zero-percent fixed coupon and a 35%–37.5% conversion premium, from the 0.25%–0.75% and 27.5%–32.5% terms at launch. They expect to price the offering after the market close Thursday.
The online healthcare provider’s shares were trading midday Thursday at US$53.78, up 3.2% on the session. Even so, the stock is up roughly 80% (from US$28.48) since the company signed an agreement on April 29 with Novo Nordisk to distribute the drugmaker’s GLP-1 Wegovy weight-loss drug.
The new CB would be convertible at a share price of roughly US$67.11, assuming midpoint premium pricing and at the current share price.
Him & Hers is using a portion of the deal proceeds to purchase a capped call, in which the CB's embedded call option is repurchased and warrants are sold at a higher strike price to offset earnings dilution recognition from the CB to a premium share price – assuming a 100% upper strike, the capped call would offset dilution up to a share price above US$100.
Him & Hers’ shares hit at an all-time high price of US$72.98 in February.
The company is using the rest of the money to accelerate “global expansion through both organic growth and strategic acquisitions,” it outlined in the CB launch press release.
“The funds will also support the technology team, led by newly appointed CTO Mo Elshenawy, to expand the company’s data pipeline, develop AI tools, and advance personalized treatments to enhance the consumer healthcare experience.”
Simultaneous with the CB launch, Hims & Hers announced the appointment of Elshenawy, the former CTO of General Motors’ self-driving unit Cruise, as its new CTO.
This would be only the fifth CB issued in the US since the beginning of April.
Hims & Hers, which went public in early 2021 by merging with the Oaktree Acquisition SPAC, is one of a handful of issuers that are using a CB to bulk up through a purely opportunistic financing.
In its Q1 reported on Monday, the company generated US$91.1m of adjusted Ebitda while growing revenue by 111% to US$586m, shattering the US$61.3m of Ebitda analysts had expected and coming in in line with US$583m consensus on revenue, according to LSEG data.
Hims & Hers increased expected full-year Ebitda and revenue guidance to US$295m–$335m and US$2.3bn–$2.4bn and introduced targets for 2030 to grow Ebitda and revenue to at least US$1.3bn and US$6.5bn.