Hims Inks $1.6 Billion Deal to Go Public Via Oaktree SPAC

(Bloomberg) -- Telemedicine upstart Hims Inc., best-known as an online seller of treatments for erectile dysfunction and hair loss, said Thursday it plans to go public through a merger with blank-check company Oaktree Acquisition Corp.

The deal will value the three-year-old San Francisco company at approximately $1.6 billion, according to a statement. Oaktree plans to raise about $75 million to help fund the transaction, including through investments from money manager Franklin Templeton and Oaktree clients. Details of the proposed deal were first reported by Bloomberg News last week.

“Right now is the right time” for such a deal, said Andrew Dudum, chief executive officer and co-founder of Hims. In an interview, he pointed to the company's recent expansion and a boom in telehealth as people seek alternatives to in-person doctor visits during the coronavirus pandemic.

Though Hims has been criticized for making some medicines too easy to obtain, the surge in demand for at-home health care has accelerated its growth. The company has expanded beyond drugs associated with lifestyle and wellness into treatments for mental health and urgent care. It has a brand, Hers, targeted at women, and it offers testing for Covid-19.

“This capital allows us to accelerate our ability to invest in growth and invest in condition expansion, helping millions of more people get access to affordable, high quality care,” Dudum said.

He said to expect Hims to enter other categories of treatments including diabetes, cholesterol, hypertension, sleep and fertility.

Hims had explored other options besides a SPAC, Bloomberg News had previously reported, but ultimately joined the wave of startups including Opendoor, Draftkings and Luminar that are forgoing traditional IPOs and going public by merging with blank-check companies instead.

Blank-check companies are hungry for more deals too after raising record sums. This year, 115 SPACs have raised more than $43 billion in initial public offerings on U.S. exchanges, more than half the total raised by the entities in all previous years, according to data compiled by Bloomberg.

Eye-Catching Ads

Since its founding, Hims, which gained attention with ads featuring suggestive cacti and celebrities such as rapper Snoop Dogg, says it has conducted more than two million telehealth consultations. As of June 2020, Hims & Hers had about 260,000 subscriptions. The company had $89 million in revenue in 2019, and it said it expects to bring in $138 million in 2020.

The deal is expected to raise as much as $280 million for the combined company through the contribution of up to $205 million of cash held in Oaktree's trust and a $75 million private placement of common stock priced at $10 a share. Hims management and shareholders including Founders Fund, Forerunner Ventures, Thrive Capital and McKesson Ventures will roll nearly 100% of their equity into the new company.

“We are very pleased to launch our Oaktree Acquisition Corp. franchise with this partnership with Hims & Hers, a rapidly growing provider of much-needed innovation to the healthcare system,” said Howard Marks, co-chairman of Oaktree, in a statement.

The transaction, which was unanimously approved by the boards of both companies, is subject to approval by Oaktree. The companies said the deal is expected to close in the fourth quarter.

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