Take off the wrapper

9 October 2020 By Robert Cyran Follow @rob_cyran

An Oaktree-backed blank-check company is paying a relative bargain for fast-growing online drug seller Hims. But the target is expanding from easily sold drugs for hair loss and erectile dysfunction into harder categories such as diabetes. That’ll limit its efficacy.

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Hims & Hers said on Oct. 1 that it would go public by merging with special-purpose acquisition company Oaktree Acquisition Corp in a deal that values the healthcare startup at $1.6 billion. Oaktree Acquisition is backed by Oaktree Capital Management. The deal will bring Hims & Hers $280 million in cash, $205 million of which will come from Oaktree Acquisition and another $75 million from a concurrent private placement of stock with investors at $10 per share.

Hims allows patients to see doctors through its website and sells drugs directly to them. The company started by primarily selling treatments for hair loss and erectile dysfunction, but has expanded into other areas such as birth control, dermatology and depression.

Hims said in a presentation in connection with the deal that 2019 revenue was $83 million. It estimates that will grow to $138 million this year. The firm’s adjusted EBITDA, which excludes stock-based compensation, was negative $66 million last year. Hims expects this figure to improve to negative $20 million in 2020.

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