TLDR
- Hims & Hers Health (HIMS) fell as much as 7% Monday after announcing plans for a $300 million convertible notes offering.
- The notes are due June 1, 2032, and will be offered privately to qualified institutional buyers.
- Proceeds will fund international expansion, including the planned acquisition of Eucalyptus, expected to close in mid-2026.
- The company will use some proceeds for capped call transactions to limit dilution to Class A stockholders.
- Initial purchasers were granted an option to buy up to an additional $45 million in notes within 13 days of issuance.
Hims & Hers Health (HIMS) dropped around 7% on Monday after the telehealth company said it plans to raise $300 million through convertible senior notes due 2032.
Hims & Hers Health, Inc., HIMS
The stock had already slipped nearly 4% in premarket trading when the announcement first hit, and the selling continued once markets opened.
The notes will be offered privately to qualified institutional buyers. Interest rate, conversion rate, and other key terms will be set at pricing.
Interest on the notes will be paid semi-annually. They mature on June 1, 2032, unless repurchased, redeemed, or converted before that date.
Noteholders will have the right to convert their notes under certain conditions. When conversions happen, Hims & Hers can settle them in cash, Class A common stock, or a mix of both.
Capped Calls and Dilution Protection
The company plans to use part of the proceeds for capped call transactions. These are designed to reduce potential dilution to existing Class A stockholders if the notes are converted into equity.
Initial purchasers were granted a 13-day option to buy up to an additional $45 million in notes. If exercised, that would bring the total raise to $345 million.
The notes become redeemable by the company starting June 6, 2029 — but only if the Class A stock price exceeds 130% of the conversion price for a set period. Noteholders can also require the company to buy back the notes for cash if certain fundamental change events occur.
Eucalyptus Acquisition and International Expansion
Hims & Hers said the primary use for the funds is to maintain financial flexibility for its international push. That includes the planned acquisition of Eucalyptus, an Australian telehealth platform.
The Eucalyptus deal is expected to close in mid-2026. The company has not disclosed the full financial terms of that acquisition.
Beyond the acquisition, the company said it will invest in technology and fulfillment infrastructure. It also plans to enhance AI capabilities and its closed-loop data ecosystem.
HIMS was trading down around 7.7% on Monday as of the latest available data.
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