Hims & Hers Health Inc. issues $1B in convertible notes

Hims & Hers Health, Inc. (NYSE:HIMS), a company specializing in telehealth and wellness, has entered into an agreement to issue $1 billion in convertible senior notes, according to a recent 8-K filing with the U.S. Securities and Exchange Commission. The notes, due in 2030, were sold in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933.

The transaction took place on Sunday, with the company initially offering $870 million in notes and later granting an option for the purchase of an additional $130 million, which was fully exercised the following day. The notes carry a 0.00% interest rate and will mature on May 15, 2030, unless repurchased, redeemed, or converted prior to that date. With a robust gross profit margin of 77% and positive earnings of $0.68 per share, the company’s financial health score on InvestingPro is rated as "GREAT."

Hims & Hers Health has also entered into capped call transactions with certain option counterparties, which are expected to reduce potential dilution to the company’s common stock upon conversion of the notes and offset cash payments exceeding the principal amount of converted notes. The capped call transactions have an initial cap price of $89.95 per share, representing a 75% premium over the company’s last reported sale price of its Class A common stock on the day of the note pricing.

The notes are senior unsecured obligations of the company and rank equally with Hims & Hers Health’s existing and future senior unsecured debt. They are effectively subordinate to any secured debt and structurally subordinate to liabilities of the company’s subsidiaries. Upon certain conditions, noteholders have the right to convert their notes to Class A common stock of the company at an initial conversion rate of approximately 14.1493 shares per $1,000 principal amount, subject to adjustments.

In the event of specific corporate changes, such as mergers or delisting of the company’s stock, noteholders may require Hims & Hers Health to repurchase their notes at the principal amount plus accrued interest. The notes also include provisions for customary events of default, which could accelerate the due date of the payment obligations.

The issuance of the convertible notes and the Class A common stock upon conversion have not been registered under the Securities Act or any state securities laws. Therefore, they may not be offered or sold in the United States absent registration or an exemption from registration requirements.

This financial move is part of the company’s strategy to raise capital, and it is based on a press release statement. The company’s stock has shown remarkable performance, with a 397% return over the past year and current trading suggesting it may be overvalued according to InvestingPro’s Fair Value analysis. For deeper insights into HIMS’s valuation and 17 additional ProTips, including detailed financial analysis and future growth projections, check out the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Hims & Hers Health, Inc. reported its first-quarter earnings for 2025, which led Truist Securities to raise the company’s price target to $45, maintaining a Hold rating. The earnings were described as a "Mixed Bag" due to a revenue beat driven by GLP-1 sales, while the company reaffirmed its revenue guidance for the year and raised its EBITDA forecast. Truist revised its revenue estimates for 2025 and 2026 to $2,302 million and $2,979 million, respectively, with adjusted EBITDA estimates increased to $324 million for 2025 and $440 million for 2026. Piper Sandler also adjusted its price target for Hims & Hers to $39, citing strong first-quarter results and a new partnership with Wegovy, while maintaining a Neutral rating. In other developments, Hims & Hers announced a $450 million convertible notes offering aimed at accelerating global expansion and strategic acquisitions. The company also appointed Mo Elshenawy as Chief Technology Officer to enhance its AI healthcare services, emphasizing the integration of AI to create a personalized healthcare platform. These moves align with Hims & Hers’ strategy to modernize healthcare and expand access to personalized care.

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