Stock Drops Following Financing Plan
Shares of Hims & Hers Health (NYSE:HIMS) fell 7% on Monday after the company revealed plans to issue $300 million of convertible senior notes due in 2032 to qualified institutional investors.
Company Targets Expansion and Infrastructure Investment
Hims & Hers said the proceeds from the offering are intended to maintain financial flexibility as it pursues its international growth strategy, including the proposed acquisition of Eucalyptus, which is expected to close in mid-2026.
The telehealth company also plans to direct capital toward technology upgrades and fulfillment infrastructure aimed at improving cost efficiency and expanding its artificial intelligence capabilities.
Details of the Convertible Notes
The notes will be senior unsecured obligations carrying interest payments on a semi-annual basis and are scheduled to mature on June 1, 2032.
Investors holding the notes will have the ability to convert them under certain conditions. Hims & Hers may settle conversions using cash, Class A common shares, or a combination of both.
The company also granted the initial purchasers an option to acquire up to an additional $45 million of notes within 13 days following issuance.
Capped Call Transactions Intended to Limit Dilution
Hims & Hers said part of the proceeds will be used to finance capped call transactions, which are designed to reduce potential dilution to holders of Class A common stock if the notes are converted.
The notes will become redeemable at the company’s option beginning June 6, 2029, if the share price of its Class A stock trades above 130% of the conversion price for a specified period.
Meanwhile, noteholders will have the right to require the company to repurchase the notes for cash if certain fundamental change events take place.