← Back to HIMS filing summaryOriginal filing text · Part I
Item 2 — Management's Discussion and Analysis
Hims & Hers Health, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
View complete filing on SEC EDGAR ↗This is the extracted source text from the SEC filing. Formatting may differ from the original document.
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our Form 10-K for the year ended December 31, 2025 (our “2025 Annual Report”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of Part II of our 2025 Annual Report and the accompanying unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q. Our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date hereof or to conform these statements to actual results or revised expectations. Forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section titled “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q.
Unless otherwise indicated or the context otherwise requires, references in this discussion and analysis to “we,” “us,” “our,” the “Company,” and “Hims & Hers” refer to Hims & Hers Health, Inc. and its subsidiaries and variable interest entities.
38
Table of Contents
Overview
Hims & Hers is a consumer-first platform transforming the way customers fulfill their health and wellness needs. Our mission is to help the world feel great through the power of better health. We believe that we have the technical infrastructure, distributed provider network, and access to clinical capabilities to lead the migration of routine office visits to a personalized, digital, accessible format. The Hims & Hers platforms (collectively, our “platform”) include access to a highly-qualified and technologically-capable provider network, a clinically-focused electronic medical records system, digital prescriptions, cloud-enabled pharmacy fulfillment, and personalization capabilities. Our digital platform enables access to treatments for a broad range of conditions, including primarily those related to sexual health, hair loss, hormone health, weight loss, dermatology, and mental health, as well as services such as comprehensive laboratory testing. Hims & Hers connects patients to licensed healthcare professionals who can prescribe medications when appropriate. Prescriptions are fulfilled online through licensed pharmacies, making accessing treatments simple, affordable, and straightforward. Through the Hims & Hers mobile applications, consumers can access a range of educational programs, wellness content, community support, and other services that promote lifelong health and wellness.
In addition, we offer access to a range of health and wellness products designed to meet individual needs, which can include curated prescription and non-prescription products. Our products and services are available for purchase directly by customers on our websites and mobile applications. Additionally, Hims & Hers non-prescription products can be found in tens of thousands of top retail locations in the United States.
Revenue and Key Business Metrics
Our management monitors United States Revenue and Rest of the World Revenue (both defined below) to track our total revenue generation. We also monitor the additional key business metrics set forth below to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. Increases or decreases in these key business metrics may not correspond with increases or decreases in our revenue. We continually and strategically review our key business metrics to ensure that they are helpful in managing or monitoring the performance of our business as it grows, which may result in changes in our key business metrics over time. Our management primarily uses the Subscribers and Monthly Revenue per Average Subscriber metric, each as defined below, to manage and monitor the performance of our business.
The limitations our key business metrics have as an analytical tool include: (i) they might not accurately predict our future financial results pursuant to accounting principles generally accepted in the United States of America (“U.S. GAAP”); and (ii) other companies, including companies in our industry, may calculate our key business metrics or similarly titled measures differently, which reduces their usefulness as comparative measures.
Our consolidated revenue primarily comprises online sales of health and wellness products through our websites and mobile applications, including prescription and non-prescription products, as well as services, primarily consisting of medical consultation services, membership-based access, post-consultation service support, and delivery of laboratory testing results, as applicable. Our online sales are net of refunds, credits, and chargebacks, and include revenue recognition adjustments recorded pursuant to U.S. GAAP, primarily relating to deferred revenue and returns reserve. A substantial majority of our online sales are subscription-based, where customers agree to be billed on a recurring basis to have products and services automatically delivered to them. This revenue also includes sales from customers who have made one-time purchases. Additionally, in the United States, we offer a range of health and wellness products through wholesale partners as a way of generating brand awareness with new customers in physical environments and on third-party platforms, with such revenue not considered material to our business.
Brief descriptions of our key business metrics are provided below.
“United States Revenue” represents the sales of products and services by our consolidated legal entities operating within jurisdictions located inside of the United States.
“Rest of the World Revenue” represents the sales of products and services by our consolidated legal entities operating within jurisdictions located outside of the United States.
39
Table of Contents
“Subscribers” are customers who have one or more “Subscriptions” pursuant to which they have agreed to be automatically billed on a recurring basis at a defined cadence. The Subscription billing cadence is typically defined as a number of days (for example, billed every 30 days or every 90 days), which are excluded from our reporting when payment has not occurred at the contracted billing cadence. Subscribers can cancel or snooze Subscriptions in between billing periods to stop receiving additional products and/or services and can reactivate Subscriptions to continue receiving additional products and/or services. Customers who have made one-time purchases are not considered Subscribers.
“Monthly Revenue per Average Subscriber” is defined as total revenue divided by “Average Subscribers”, which amount is then further divided by the number of months in a period. “Average Subscribers” are calculated as the sum of the Subscribers at the beginning and end of a given period divided by 2.
The table below provides a breakdown of total revenue between United States Revenue and Rest of the World Revenue for the three and six months ended June 30, 2026 and 2025, as well as key business metrics that we believe drive total revenue (i.e., Subscribers and Monthly Revenue per Average Subscriber) and the change and percentage change between such periods (in thousands, except for Monthly Revenue per Average Subscriber and percentage change):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 Change % Change 2026 2025 Change % Change
United States Revenue $ 621,830 $ 537,286 $ 84,544 16 % $ 1,151,739 $ 1,115,978 $ 35,761 3 %
Rest of the World Revenue 131,384 7,547 123,837 1,641 % 209,579 14,865 194,714 1,310 %
Total revenue $ 753,214 $ 544,833 $ 208,381 38 % $ 1,361,318 $ 1,130,843 $ 230,475 20 %
Subscribers (end of period) 2,891 2,439 452 19 % 2,891 2,439 452 19 %
Monthly Revenue per Average Subscriber $ 92 $ 76 $ 16 21 % $ 84 $ 81 $ 3 4 %
We generated $621.8 million in United States Revenue for the three months ended June 30, 2026, an increase of $84.5 million, or 16%, as compared to $537.3 million for the three months ended June 30, 2025. We generated $1,151.7 million in United States Revenue for the six months ended June 30, 2026, an increase of $35.8 million, or 3%, as compared to $1,116.0 million for the six months ended June 30, 2025. The increases in United States Revenue for the three and six months ended June 30, 2026 were primarily driven by growth in our Hers brand as a result of an expanded assortment of branded weight loss offerings, partially offset by the impact of a change in the timing of revenue recognition for certain of our weight loss offerings, inclusive of our Hers brand, as a result of a shift to shorter shipping cadences. During the three months ended June 30, 2026, our Hers brand represented over 40% of United States Revenue, compared to representing approximately 35% of United States Revenue for the three months ended June 30, 2025. During each of the six months ended June 30, 2026 and 2025, our Hers brand represented approximately 40% of United States Revenue. Uptake of the Hers brand is primarily driven by our weight loss and dermatology offerings. During the three and six months ended June 30, 2026, a majority of our total United States Revenue came from non-glucagon-like peptide-1 receptor agonist (“GLP-1”) offerings. United States Revenue can fluctuate on a period-to-period basis due to various factors, including launches of new product offerings, the success of our marketing campaigns, product shipping cadences, and pricing decisions impacting customer uptake of our offerings, as well as product availability and the regulatory landscape impacting our offerings.
We generated $131.4 million in Rest of the World Revenue for the three months ended June 30, 2026, an increase of $123.8 million, or 1,641%, as compared to $7.5 million for the three months ended June 30, 2025. We generated $209.6 million in Rest of the World Revenue for the six months ended June 30, 2026, an increase of $194.7 million, or 1,310%, as compared to $14.9 million for the six months ended June 30, 2025. Growth in Rest of the World Revenue was primarily driven by the geographic expansion from our recent acquisitions, including our acquisition of Eucalyptus, which closed in the last month of the second quarter of 2026. Rest of the World Revenue can fluctuate on a period-to-period basis due to various factors, including those related to United States Revenue discussed above, as well as the magnitude of any future geographic expansion.
40
Table of Contents
Subscribers grew 19% to approximately 2.9 million as of June 30, 2026 as compared to approximately 2.4 million Subscribers as of June 30, 2025. Growth in Subscribers was primarily driven by increased traffic to our platform (through our websites and mobile applications) as a result of our marketing activities, including both ordinary-course marketing campaigns and a specialized Super Bowl marketing campaign in both six month periods, as well as by our recent acquisition of Eucalyptus and improved onsite and customer onboarding experiences.
Monthly Revenue per Average Subscriber increased $16 to $92 for the three months ended June 30, 2026 as compared to $76 for the three months ended June 30, 2025 and increased $3 to $84 for the six months ended June 30, 2026 as compared to $81 for the six months ended June 30, 2025. These increases were primarily due to changes in product mix, including uptake of our weight loss offerings, partially offset by the shift to shorter shipping cadences for certain of our offerings as discussed above. This metric includes revenue contributed by customers who made one-time purchases and therefore were not considered Subscribers. If the revenue contribution of customers who made one-time purchases was excluded from this metric, Monthly Revenue per Average Subscriber for each of the three and six months ended June 30, 2026 would have been lower by approximately $10, and Monthly Revenue per Average Subscriber for each of the three and six months ended June 30, 2025 would have been lower by less than $5. This metric was also impacted by including a single month of contributions from Eucalyptus during the three months ended June 30, 2026. If Eucalyptus revenue and Average Subscribers were excluded from this metric, Monthly Revenue per Average Subscriber for the three months ended June 30, 2026 would have been $90. The metric for the six months ended June 30, 2026 was unaffected by contributions from Eucalyptus.
We continuously test and optimize the online experience and offerings to improve the customer experience, maximize sales, and improve gross margin. Our Subscribers select an available cadence at which they wish to receive product shipments or a treatment term depending on the offering. In addition to a 30-day cadence or treatment term, we offer Subscribers the ability to select from a range of Subscription shipment cadences or treatment terms, from every 60 days to 360 days, depending on the offering, as available. In recent quarters, there has been a shift towards shorter and more frequent shipping cadences, which has impacted our gross margins. We expect this shift to continue as we enhance our membership program described below. Subscriptions automatically renew on the applicable cadence selected by the Subscriber when purchasing or updating the Subscription. To ensure timely delivery of prescription medications and in accordance with our terms and conditions, Subscribers may sometimes be charged, and products may sometimes be shipped, earlier than their regularly scheduled cadence to accommodate holidays or for other operational reasons to support continuity of treatment. With the exception of prepaid offerings and the membership program described below, the Subscriber is typically billed upon each shipment. Subscribers can cancel or snooze Subscriptions in between billing periods to stop receiving additional products and can reactivate Subscriptions at any time. For longer term Subscriptions, we incur shipping and fulfillment expenses fewer times per year than for 30-day Subscriptions. The Subscriber uptake of longer term Subscriptions typically results in lower recurring costs and higher gross margins as compared to 30-day Subscriptions.
Additionally, at the end of March 2026, we launched a membership program for our weight loss offerings in the United States, which we expect to evolve in future reporting periods. Among other benefits, this program grants eligible customers access to a range of weight loss medications, plus unlimited support from our network of healthcare providers. Memberships primarily auto-renew monthly and must be active for customers to obtain weight loss medications through a separate Subscription. While customers must have an active membership to obtain prescription medication, they can hold a membership without a medication plan.
Key Factors Affecting Results of Operations
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges.
New customer acquisition
Our ability to attract new customers is a key factor for our future growth. To date, we have successfully acquired new customers through marketing and the development of our brands, as well as through launches of new offerings, including branded weight loss offerings, and through mergers and acquisitions. As a result, revenue has increased each year since our launch. If we are unable to acquire enough new customers in the future, revenue might decline. New customer acquisition could be negatively impacted if our marketing efforts are less effective in the future. Increases in advertising rates could also negatively impact our ability to acquire new customers. Consumer tastes, preferences, and sentiment for our brands may also change and result in decreased demand for our products and services. Changes in the legal or regulatory environment, including
41
Table of Contents
as a result of our expansion into new geographies, have and could continue to impact our ability to acquire new customers, including changes to privacy, healthcare, or other laws, or the interpretation or enforcement of such laws, and could impact customer acquisition costs. In addition, acquiring new customers may be impacted by supply chain constraints related to our offerings that may be outside of our control and may impact our future results.
Retention of customers
Our ability to retain customers is a key factor in our ability to generate revenue. A majority of our customers purchase products and services through subscription-based plans, where Subscribers are billed and sent products and/or receive services on a recurring basis. The recurring nature of this revenue provides us with a certain amount of predictability for future revenue if past Subscriber behavior stays relatively consistent in the future. We expect to retain a significant majority of revenue from Subscribers who maintain a Subscription for more than two years (sometimes referred to by us as “long-term revenue retention”). However, if customer behavior changes, or our assumptions regarding long-term revenue retention are incorrect and Subscriber retention decreases in the future, then future revenue will be negatively impacted. Macroeconomic factors including inflation or recessionary pressures or the impact of trade actions may affect the ability of our Subscribers to continue to pay for our products and services, which may also impact the future results of our operations.
Investments in growth
We expect to continue to focus on long-term growth. We intend to continue to invest in our fulfillment, distribution, and operating capabilities, including in our wholly-owned pharmacies (also referred to herein as our “Pharmacies”), our laboratory testing facilities and our peptide manufacturing facility (collectively with our Pharmacies, sometimes referred to herein as our “Facilities”), with the goal of fulfilling a majority of our pharmaceutical and over-the-counter customer orders through internal fulfillment capabilities. For example, we are making investments in the expansion of our current Facilities, which are expected to continue for at least the next 12 months. Additionally, we expect to continue to make significant investments in marketing to acquire new customers across all of our brands, and we expect to continue to make investments in product offerings and customer experience. We are working to enhance our offerings and expand the breadth of health and wellness products and services offered on our websites and mobile applications. We are also continuing to invest in our artificial intelligence capabilities, including through investment in hiring and retaining engineering and artificial intelligence personnel. In addition, we may continue to pursue opportunities to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. Specifically, in July 2025, we acquired all of the outstanding equity of Zava Global GmbH (which is now H&H Germany GmbH) and its subsidiaries (“Zava”), a digital health platform registered in Germany with operations in the United Kingdom and the European Union, in November 2025, we acquired all of the outstanding equity of Medici Technologies, Inc., which is now Hims & Hers Canada Inc. (“Medici”), a digital health platform registered in Canada, in January 2026, we completed a merger pursuant to which YourBio became our wholly-owned subsidiary, and in June 2026, we acquired all of the outstanding equity of EUC Management Pty Ltd ACN 631 013 860 and its subsidiaries (“Eucalyptus”), a digital health and wellness platform headquartered in Australia, with operations in Australia, the United Kingdom, Germany, Ireland, Canada, and Japan (for additional details regarding the YourBio and Eucalyptus transactions, refer to the “Liquidity and Capital Resources” section). In the short term, we expect these investments to increase our operating expenses; however, in the long term, we anticipate that these investments will positively impact our results of operations. If we are unsuccessful at improving our offerings or are unable to generate additional demand for our offerings, we may not recover the financial investments we make into the business and revenue may not increase in the future.
Expansion into new specialties
We expect to continue to expand into new health and wellness specialties with our offerings. Specialty expansion allows us to increase the number of health and wellness consumers for whom we can provide products and services. It also allows us to offer access to treatment of additional conditions that may already affect our current customers. Expanding into new health and wellness specialties has required and may continue to require financial investments in additional headcount, marketing and customer acquisition costs, additional operational capabilities, and may require the purchase of new inventory. If we are unable to generate or maintain sufficient demand in new health and wellness specialties, we may not recover the financial investments we make into new specialties and revenue may not increase in the future.
42
Table of Contents
Non-GAAP Financial Measures
In addition to our financial results determined in accordance with U.S. GAAP, we present Adjusted EBITDA (which is a non-GAAP financial measure), Adjusted EBITDA margin (which is a non-GAAP ratio), and Free Cash Flow (which is a non-GAAP financial measure), each as defined below. We use Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow, when taken together with the corresponding U.S. GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We consider Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow is helpful to our investors as they are used by management in assessing the health of our business, our operating performance, and our liquidity.
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures or ratios differently or may use other financial measures or ratios to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow as tools for comparison. Reconciliations are provided below to the most directly comparable financial measures stated in accordance with U.S. GAAP. Investors are encouraged to review our U.S. GAAP financial measures and not to rely on any single financial measure to evaluate our business.
Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. “Adjusted EBITDA” is defined as net (loss) income before legal contingencies that are considered non-recurring, stock-based compensation, depreciation and amortization, acquisition and transaction-related costs (which includes (i) consideration paid for employee and nonemployee compensation with vesting requirements incurred directly as a result of acquisitions, and (ii) transaction professional services), restructuring and other related charges that are considered non-recurring, change in fair value of liabilities, payroll tax expense related to stock-based compensation, impairment of long-lived assets, interest income and expense, net, change in fair value of equity securities, and income taxes. “Adjusted EBITDA margin” is defined as Adjusted EBITDA divided by revenue.
In the first quarter of 2026, we announced a strategic shift for our United States weight loss offering ("2026 US WL Announcement"). As a result, we evolved our United States weight loss offering to match our global approach towards providing access to branded GLP-1 medications, and offering access to compounded GLP-1 medications through our platform on a limited scale. In connection with the strategic shift, we revised our definition of Adjusted EBITDA to include restructuring and other related charges that are considered non-recurring, as we believe these costs are distinguishable from ongoing operating costs and do not reflect current or expected performance of our ongoing operations. These costs consist of inventory write-downs, third-party costs, and non-recurring employee compensation charges, all of which were incurred directly as a result of the 2026 US WL Announcement. Additional restructuring and other related charges were incurred in the second quarter of 2026, and to the extent that we incur further restructuring and other related charges in connection with the 2026 US WL Announcement in future periods, these costs will be presented consistently with our current presentation. As we did not record any non-recurring restructuring and other related charges in prior years, prior period disclosures were not impacted.
In the second quarter of 2025, we revised our definition of Adjusted EBITDA to include payroll tax expense related to stock-based compensation, which comprises employer taxes incurred upon vesting of restricted stock units and upon exercise of nonqualified stock options. As a result of recent trends in our stock price, this amount was not considered significant for prior periods and, accordingly, prior period disclosures were not recast to conform to the current presentation.
43
Table of Contents
The following table reconciles net (loss) income to Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Revenue $ 753,214 $ 544,833 $ 1,361,318 $ 1,130,843
Net (loss) income (86,290) 42,505 (178,405) 91,990
Legal contingencies 47,500 — 62,500 —
Stock-based compensation 42,116 35,726 78,978 60,584
Depreciation and amortization 29,477 10,465 51,430 18,741
Acquisition and transaction-related costs 28,835 6,231 42,201 6,255
Restructuring and other related charges 4,626 — 38,114 —
Change in fair value of liabilities 4,223 — 21,869 —
Payroll tax expense related to stock-based compensation 2,022 3,078 4,889 3,078
Impairment of long-lived assets 1,148 — 1,148 —
Interest income and expense, net (2,254) (6,117) (7,287) (8,713)
Change in fair value of equity securities (4,737) — 4,945 —
(Benefit from) provision for income taxes (6,343) (9,652) (15,779) 1,358
Adjusted EBITDA $ 60,323 $ 82,236 $ 104,603 $ 173,293
Net (loss) income as a % of revenue (11) % 8 % (13) % 8 %
Adjusted EBITDA margin 8 % 15 % 8 % 15 %
Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. We compensate for these limitations by providing specific information regarding the U.S. GAAP items excluded from Adjusted EBITDA. When evaluating our performance, you should consider Adjusted EBITDA in addition to, and not as a substitute for, other financial performance measures, including our net (loss) income and other U.S. GAAP results.
Free Cash Flow is a key performance measure that our management uses to assess our liquidity. Because Free Cash Flow facilitates internal comparisons of our historical liquidity on a more consistent basis, we use this measure for business planning purposes. “Free Cash Flow” is defined as net cash (used in) provided by operating activities, less purchases of property, equipment, and intangible assets and investment in website development and internal-use software in investing activities.
The following table reconciles net cash (used in) provided by operating activities to Free Cash Flow for the three and six months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Net cash (used in) provided by operating activities $ (35,939) $ (19,117) $ 53,417 $ 89,973
Purchases of property, equipment, and intangible assets in investing activities (25,926) (46,065) (55,770) (101,392)
Investment in website development and internal-use software in investing activities (6,328) (4,250) (12,808) (7,961)
Free Cash Flow $ (68,193) $ (69,432) $ (15,161) $ (19,380)
Some of the limitations of Free Cash Flow include (i) Free Cash Flow does not represent our residual cash flow for discretionary expenditures and our non-discretionary commitments, and (ii) Free Cash Flow includes capital expenditures, the
44
Table of Contents
benefits of which may be realized in periods subsequent to those in which the expenditures took place. In evaluating Free Cash Flow, you should be aware that in the future we will have cash outflows similar to the adjustments in this presentation. Our presentation of Free Cash Flow should not be construed as an inference that our future results will be unaffected by these cash outflows or any unusual or non-recurring items. When evaluating our performance, you should consider Free Cash Flow in addition to, and not as a substitute for, other financial performance measures, including our net cash (used in) provided by operating activities and other U.S. GAAP results.
Basis of Presentation
Currently, we conduct business through one operating segment. The unaudited condensed consolidated financial statements include the accounts of our company, our wholly-owned subsidiaries, and variable interest entities (“VIEs”) for which we are the primary beneficiary. As of June 30, 2026, the VIEs are the “Affiliated Medical Groups,” which are professional corporations or other professional entities located in the United States and owned by licensed physicians and that engage licensed healthcare professionals (physicians, physician assistants, nurse practitioners, and mental health providers; collectively referred to as “Providers” or individually, a “Provider”) to provide consultation services. We determined that we are the primary beneficiary of the Affiliated Medical Groups for accounting purposes because we have the ability to direct the activities that most significantly affect these entities’ economic performance and have the obligation to absorb the entities’ losses. Under the VIE model, we present the results of operations and the financial position of the entities as part of our unaudited condensed consolidated financial statements as if the consolidated group were a single economic entity. Additionally, Apostrophe Pharmacy LLC and XeCare, LLC, which are licensed mail order pharmacies providing prescription fulfillment solely to our customers, were VIEs through April 2025 and November 2025, respectively, when, as a result of changes of ownership, they became wholly-owned subsidiaries of our company and were no longer considered VIEs.
Components of Results of Operations
Revenue
We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.
Our consolidated revenue primarily comprises online sales of health and wellness products through our websites and mobile applications, including prescription and non-prescription products, as well as services, primarily consisting of medical consultation services, membership-based access, post-consultation service support, and delivery of laboratory testing results, as applicable. Additionally, revenue is generated through wholesale arrangements.
Cost of revenue
Cost of revenue consists of costs directly attributable to the products shipped and services rendered, including costs of purchased products net of vendor rebates per contract terms, as applicable, manufactured products, packaging materials, shipping costs, labor costs directly related to revenue generating activities including primarily medical consultation services and manufacturing labor, and overhead costs associated with manufactured products. Costs related to free products where there is no expectation of future purchases from a customer and depreciation and amortization on property, equipment, and software (other than related to manufactured products) are considered to be operating expenses and are excluded from cost of revenue.
Gross profit and gross margin
Our gross profit represents total revenue less our total cost of revenue, and our gross margin is our gross profit expressed as a percentage of our total revenue. Our gross profit and gross margin have been and will continue to be affected by a number of factors, including the prices we charge for our products and services, the costs we incur from our vendors for certain components of our cost of revenues, the mix of the various products and services we sell in a period including the launch of new offerings, the volume of fulfillment through internal fulfillment capabilities, and our ability to sell our inventory. Our gross margin is expected to remain below comparative periods in the near term, primarily as a result of the 2026 US WL Announcement and recent international acquisitions. While we expect our gross margin to fluctuate from period to period depending on these and other factors, over the long term we expect gross margin to stabilize as we continue to scale our business and increase our ability to negotiate and optimize more favorable costs of revenue, as well as integrate new acquisitions.
45
Table of Contents
Marketing expenses
The largest component of our marketing expenses consists of our discretionary customer acquisition costs. Customer acquisition costs, also called paid marketing expense, are the advertising and media costs associated with our efforts to acquire new customers, promote our brands, and build awareness for our products and services. Customer acquisition costs include advertising in digital media, social media, television, radio, out-of-home media, and various other media outlets and exclude content production costs. Marketing expenses also include overhead expenses, including salaries, benefits, taxes, and stock-based compensation for personnel; agency, contractor, and consulting expenses; content production, software, and other marketing operating costs. Marketing is an important driver of growth and we intend to continue to make significant investments in customer acquisition and our marketing organization. Marketing expenses may fluctuate from period to period due to the timing and discretionary nature of these expenses. While marketing expenses may fluctuate as a percentage of revenue, we expect total marketing expenses as a percentage of revenue to continue to decrease over the long term.
Operations and support expenses
Operations and support expenses include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our supply chain, retail, medical, pharmacy, fulfillment, diagnostics, customer service, and corporate quality functions. These expenses also include operating expenses primarily relating to operations and support functions for our Facilities, warehousing and storage, fulfillment, transaction processing, third-party software and hosting to support those functions, and related depreciation and amortization. We expect operations and support expenses may increase for the foreseeable future as we continue to invest in our fulfillment and operating capabilities and grow our business, resulting in additional operational efficiencies, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
Technology and development expenses
Technology and development expenses include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our engineering, product management, product development, and data science functions. These expenses also include operating expenses primarily relating to technology and development functions for the operation, maintenance, and enhancement of our digital platform, websites, and mobile applications, inclusive of related expenses for third-party software and hosting to support those functions, and related depreciation. Expenses also include investments to develop new health and wellness products and services. We expect technology and development expenses may increase in the foreseeable future as we grow our business and continue to invest in our platform, including our artificial intelligence capabilities, as well as in new offerings. We expect these expenses to stabilize over the long term, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
General and administrative expenses
General and administrative expenses (“G&A”) include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our executive, legal, human resources, finance, brand strategy, communications, public and government relations, and other corporate functions. These expenses also include operating expenses primarily relating to general and administrative functions for insurance, third-party software and hosting to support those functions, related depreciation and amortization, and other general corporate costs. G&A may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
Total other income (expense), net
Total other income (expense), net primarily consists of changes in fair value of equity securities and liabilities, as well as interest income. Additionally, total other income (expense), net includes expenses associated with our debt, as well as non-operating and one-time charges classified outside of operating expenses. Interest income is driven by our cash and cash equivalents and available-for-sale investments and fluctuates from period to period based on balances and applicable interest rates. Interest expense is related to the amortization of debt discount and issuance costs on our debt, applicable interest on any borrowings under our revolving credit facility, and accretion of the discount related to deferred acquisition payable balances.
46
Table of Contents
Benefit from (provision for) income taxes
Benefit from (provision for) income taxes primarily consists of the impacts of pre-tax losses, federal and state tax credits, and windfall tax benefits, partially offset by officer compensation limitations and acquisition-related addbacks. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with our plans and estimates. If and when we conclude that we are more likely than not to utilize some or all of our deferred tax assets, we release some or all of our valuation allowance and our tax provision will decrease in the period in which we make such determination, which will cause a corresponding one-time increase to net income.
47
Table of Contents
Results of Operations
Comparisons for the three and six months ended June 30, 2026 and 2025
The following table sets forth our unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026 and 2025, and the dollar and percentage change between the two periods (dollars in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 Change % Change 2026 2025 Change % Change
Revenue $ 753,214 $ 544,833 $ 208,381 38 % $ 1,361,318 $ 1,130,843 $ 230,475 20 %
Cost of revenue 272,411 128,637 143,774 112 % 483,728 283,958 199,770 70 %
Gross profit 480,803 416,196 64,607 16 % 877,590 846,885 30,705 4 %
Operating expenses:(1)
Marketing 262,236 217,862 44,374 20 % 484,239 449,097 35,142 8 %
Operations and support 95,481 66,490 28,991 44 % 191,984 129,523 62,461 48 %
Technology and development 54,901 37,848 17,053 45 % 101,837 67,762 34,075 50 %
General and administrative 165,377 67,273 98,104 146 % 275,045 115,883 159,162 137 %
Total operating expenses 577,995 389,473 188,522 48 % 1,053,105 762,265 290,840 38 %
(Loss) income from operations (97,192) 26,723 (123,915) * (175,515) 84,620 (260,135) *
Other income (expense):
Change in fair value of equity securities 4,737 — 4,737 * (4,945) — (4,945) *
Change in fair value of liabilities (4,223) — (4,223) * (21,869) — (21,869) *
Other income, net 4,045 6,130 (2,085) (34) % 8,145 8,728 (583) (7) %
Total other income (expense), net 4,559 6,130 (1,571) (26) % (18,669) 8,728 (27,397) *
(Loss) income before income taxes (92,633) 32,853 (125,486) * (194,184) 93,348 (287,532) *
Benefit from (provision for) income taxes 6,343 9,652 (3,309) (34) % 15,779 (1,358) 17,137 *
Net (loss) income $ (86,290) $ 42,505 $ (128,795) * $ (178,405) $ 91,990 $ (270,395) *
______________
(*) Not meaningful
(1)Includes stock-based compensation expense as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Marketing $ 3,004 $ 3,435 $ 5,819 $ 6,209
Operations and support 7,016 4,579 13,129 7,585
Technology and development 6,645 5,247 12,635 9,292
General and administrative 25,451 22,465 47,395 37,498
Total stock-based compensation expense $ 42,116 $ 35,726 $ 78,978 $ 60,584
48
Table of Contents
The following table sets forth our results of operations as a percentage of our total revenue for the periods presented:
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Revenue 100 % 100 % 100 % 100 %
Cost of revenue 36 % 24 % 36 % 25 %
Gross profit 64 % 76 % 64 % 75 %
Operating expenses:
Marketing 35 % 40 % 36 % 40 %
Operations and support 13 % 12 % 14 % 11 %
Technology and development 7 % 7 % 7 % 6 %
General and administrative 22 % 12 % 20 % 10 %
Total operating expenses 77 % 71 % 77 % 67 %
(Loss) income from operations (13) % 5 % (13) % 8 %
Other income (expense):
Change in fair value of equity securities 1 % — % — % — %
Change in fair value of liabilities (1) % — % (2) % — %
Other income, net 1 % 1 % 1 % 1 %
Total other income (expense), net 1 % 1 % (1) % 1 %
(Loss) income before income taxes (12) % 6 % (14) % 9 %
Benefit from (provision for) income taxes 1 % 2 % 1 % (1) %
Net (loss) income (11) % 8 % (13) % 8 %
Revenue
Revenue was $753.2 million for the three months ended June 30, 2026, compared to $544.8 million for the three months ended June 30, 2025, an increase of $208.4 million, or 38%. Revenue was $1,361.3 million for the six months ended June 30, 2026, compared to $1,130.8 million for the six months ended June 30, 2025, an increase of $230.5 million, or 20%. For a detailed discussion of these increases, refer to the “Revenue and Key Business Metrics” section.
Cost of revenue and gross profit
Cost of revenue was $272.4 million for the three months ended June 30, 2026, compared to $128.6 million for the three months ended June 30, 2025, an increase of $143.8 million, or 112%. This increase was due to increased product and packaging costs of 141%, increased shipping costs of 56%, and increased costs associated with medical consultation services of 30%, compared to the three months ended June 30, 2025. Cost of revenue was $483.7 million for the six months ended June 30, 2026, compared to $284.0 million for the six months ended June 30, 2025, an increase of $199.8 million, or 70%. This increase was primarily due to increased product and packaging costs of 89%, increased shipping costs of 31%, and increased costs associated with medical consultation services of 17% compared to the six months ended June 30, 2025. These increases in cost of revenue for the three and six months ended June 30, 2026 were primarily due to our weight loss offerings, some of which have higher product and packaging costs and shipping costs compared to our other offerings, including as a result of the 2026 US WL Announcement, as well as overall increased business activity with the addition of new Subscribers and our recent acquisitions. There were no non-recurring restructuring and other related charges in connection with the 2026 US WL Announcement impacting cost of revenue for the three months ended June 30, 2026. Cost of revenue for the six months ended June 30, 2026 included $28.5 million of non-recurring restructuring and other related charges, consisting of inventory write-downs, in connection with the 2026 US WL Announcement.
Gross profit was $480.8 million for the three months ended June 30, 2026, compared to $416.2 million for the three months ended June 30, 2025, an increase of $64.6 million, or 16%. Correspondingly, gross margin was 64% for the three months ended June 30, 2026, compared to 76% for the three months ended June 30, 2025. Gross profit was $877.6 million for the six months ended June 30, 2026, compared to $846.9 million for the six months ended June 30, 2025, an increase of $30.7 million, or 4%. Correspondingly, gross margin was 64% for the six months ended June 30, 2026, compared to 75% for the six months ended
49
Table of Contents
June 30, 2025. These decreases in gross margin were primarily due to our weight loss offerings, which have shorter shipping cadences and increased fulfillment costs, along with the impact of the growth of our international business and new offerings, the non-recurring restructuring and other related charges in connection with the 2026 US WL Announcement, and the impact of recent acquisitions.
Marketing expenses
Marketing expenses were $262.2 million for the three months ended June 30, 2026, compared to $217.9 million for the three months ended June 30, 2025, an increase of $44.4 million, or 20%. The most significant component of marketing expenses is customer acquisition costs, which increased to $229.5 million in the three months ended June 30, 2026, compared to $188.4 million for the three months ended June 30, 2025, an increase of $41.1 million. Marketing expenses were $484.2 million for the six months ended June 30, 2026, compared to $449.1 million for the six months ended June 30, 2025, an increase of $35.1 million, or 8%. Customer acquisition costs increased to $422.3 million in the six months ended June 30, 2026, compared to $390.0 million for the six months ended June 30, 2025, an increase of $32.3 million. The increases in customer acquisition costs were primarily a result of management’s decision to increase investment in search and affiliate marketing as we continue to identify opportunities to drive new customer growth, and which investment further expanded with the addition of newer offerings. These increases were partially offset by management’s decision to focus on more efficient customer acquisition channels, which has resulted in lower marketing expenses as a percent of revenue in the current year compared to the prior year.
Operations and support
Operations and support expenses were $95.5 million for the three months ended June 30, 2026, compared to $66.5 million for the three months ended June 30, 2025, an increase of $29.0 million or 44%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses and excluding stock-based compensation) of $8.9 million, an increase in order fulfillment and transaction processing of $8.3 million, an increase in depreciation, amortization, and technology costs relating to operations and support functions of $5.7 million, and an increase in stock-based compensation of $2.4 million. Operations and support expenses for the three months ended June 30, 2026 also included less than $5 million of non-recurring restructuring and other related charges. The increase in operations and support was partially offset by a decrease in professional services of $1.1 million. Operations and support expenses were $192.0 million for the six months ended June 30, 2026, compared to $129.5 million for the six months ended June 30, 2025, an increase of $62.5 million or 48%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $20.7 million, an increase in order fulfillment and transaction processing of $15.7 million, an increase in depreciation, amortization, and technology costs relating to operations and support functions of $10.6 million, and an increase in stock-based compensation of $5.5 million. Operations and support expenses for the six months ended June 30, 2026 also included less than $10 million of non-recurring restructuring and other related charges. The increase was partially offset by a decrease in professional services of $2.3 million.
Technology and development
Technology and development expenses were $54.9 million for the three months ended June 30, 2026, compared to $37.8 million for the three months ended June 30, 2025, an increase of $17.1 million or 45%. The increase in technology and development expenses was primarily driven by an increase in depreciation, amortization, and technology costs of $7.9 million, an increase in product development costs of $3.3 million, an increase in professional services of $3.2 million, and an increase in stock-based compensation of $1.4 million. Technology and development expenses were $101.8 million for the six months ended June 30, 2026, compared to $67.8 million for the six months ended June 30, 2025, an increase of $34.1 million or 50%. The increase in technology and development expenses was primarily driven by an increase in depreciation, amortization, and technology costs of $14.0 million, an increase in product development costs of $6.0 million, an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $4.4 million, an increase in professional services of $3.5 million, and an increase in stock-based compensation of $3.3 million.
General and administrative
General and administrative expenses were $165.4 million for the three months ended June 30, 2026, compared to $67.3 million for the three months ended June 30, 2025, an increase of $98.1 million or 146%. The increase in general and administrative
50
Table of Contents
expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $24.0 million, an increase in depreciation, amortization, and technology costs relating to general and administrative functions of $10.7 million, an increase in professional services of $4.7 million, an increase in stock-based compensation of $3.0 million, and an increase in insurance premiums of $1.0 million. General and administrative expenses for the three months ended June 30, 2026 also included $47.5 million of legal contingencies that are considered non-recurring. General and administrative expenses were $275.0 million for the six months ended June 30, 2026, compared to $115.9 million for the six months ended June 30, 2025, an increase of $159.2 million, or 137%. The increase in general and administrative expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $39.3 million, an increase in depreciation, amortization, and technology costs relating to general and administrative functions of $17.6 million, an increase in professional services of $10.3 million, an increase in stock-based compensation of $9.9 million, an increase in acquisition costs of $8.3 million, and an increase in insurance premiums of $2.1 million. General and administrative expenses for the six months ended June 30, 2026 also included $62.5 million of legal contingencies that are considered non-recurring.
Total other income (expense), net
Total other income was $4.6 million for the three months ended June 30, 2026, compared to $6.1 million for the three months ended June 30, 2025, a decrease of $1.6 million. The decrease was driven primarily by a loss from the change in fair value of liabilities for the three months ended June 30, 2026 of $4.2 million, interest expense for the three months ended June 30, 2026 of $3.7 million, compared to $1.1 million for the three months ended June 30, 2025, and interest income for the three months ended June 30, 2026 of $6.0 million, compared to $7.2 million for the three months ended June 30, 2025. The decrease was partially offset by a gain from the change in fair value of equity securities for the three months ended June 30, 2026 of $4.7 million. Total other expense was $18.7 million for the six months ended June 30, 2026, compared to total other income of $8.7 million for the six months ended June 30, 2025, a change of $27.4 million. The change was driven primarily by a loss from the change in fair value of liabilities for the six months ended June 30, 2026 of $21.9 million, a loss from the change in fair value of equity securities for the six months ended June 30, 2026 of $4.9 million, and interest expense of $6.6 million for the six months ended June 30, 2026, compared to $1.2 million for the six months ended June 30, 2025. The decrease was partially offset by interest income for the six months ended June 30, 2026 of $13.9 million, compared to $9.9 million for the six months ended June 30, 2025. The loss on change in fair value of liabilities was related to changes in the fair value of the earn-out consideration associated with acquisitions, which for the six months ended June 30, 2026 was primarily driven by the impact of the amendment to the Zava share purchase agreement during the first quarter of 2026; the gain and loss on change in fair value of equity securities was related to unrealized gains and losses on equity securities; the increase in interest expense was driven by the amortization of debt discount and issuance costs on our debt and interest on borrowings under our revolving credit facility; and the increase in interest income was driven by larger balances of cash and cash equivalents and investments during the current period compared to the prior period.
Benefit from (provision for) income taxes
Benefit from income taxes was $6.3 million for the three months ended June 30, 2026, compared to $9.7 million for the three months ended June 30, 2025. Benefit from income taxes was $15.8 million for the six months ended June 30, 2026, compared to a provision for income taxes of $1.4 million for the six months ended June 30, 2025. The benefit from income taxes for the three and six months ended June 30, 2026 was primarily due to the tax effect of pre-tax losses, impacts of windfall tax benefits, and research and development tax credits, partially offset by acquisition-related addbacks and officer compensation adjustments. The provision for the three and six months ended June 30, 2025 was primarily due to taxes on income during the period.
Liquidity and Capital Resources
As of June 30, 2026, our principal sources of liquidity totaled $841.0 million, consisting of (i) cash and cash equivalents, which are primarily invested in interest-bearing cash accounts and money market funds; and (ii) short-term available-for-sale investments, which are invested in government and government agency securities and corporate bonds.
During the six months ended June 30, 2026, we made cash payments for earn-out consideration related to the Zava acquisition totaling $45.7 million, with such payment amounts determined based on fiscal year 2025 results in accordance with the terms of the related share purchase agreement. The Zava earn-out consideration payments totaling $45.7 million are recorded: (i) $2.0
51
Table of Contents
million within operating activities, and (ii) $43.7 million within financing activities on the unaudited condensed consolidated statements of cash flows.
During the six months ended June 30, 2026, we made a cash payment of $5.0 million for earn-out consideration related to the C S Bio Co. asset acquisition, with such payment amount determined based on the earn-out conditions set forth in the related asset purchase agreement. This amount is recorded within operating activities on the unaudited condensed consolidated statements of cash flows.
In January 2026, we completed a merger pursuant to which YourBio Health, Inc. (“YourBio”), a U.S.-based company specializing in capillary whole blood sampling technology, became our wholly-owned subsidiary. We entered into the merger agreement to incorporate YourBio’s blood-sampling technology into our technology portfolio. The purchase price for accounting purposes was $153.0 million, including cash paid of $142.4 million and contingent consideration with an acquisition date fair value of $10.6 million (for additional details regarding the acquisition see Note 3 – Acquisitions to the condensed unaudited consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q).
In May 2026, we issued $402.5 million aggregate principal amount of 0% convertible senior notes due 2032 (the “2032 Convertible Notes”), which provided us with aggregate proceeds net of debt discount of $389.5 million. In connection with the issuance of the 2032 Convertible Notes, we separately entered into privately negotiated capped call transactions with certain financial institutions, which resulted in aggregate cash payments of $36.7 million (for additional details see Note 13 – Debt to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q). The cash proceeds and cash payments are included within financing activities on the unaudited condensed consolidated statements of cash flows.
In June 2026, Horizon BidCo Pty Ltd ACN 694 778 375 (which is now H&H Australia Intermediate Holdings Pty Ltd ACN 694 778 375), an Australian proprietary company and wholly-owned subsidiary of our company, acquired all of the outstanding equity of EUC Management Pty Ltd ACN 631 013 860 and its subsidiaries (“Eucalyptus”), a digital health and wellness platform headquartered in Australia, with operations in Australia, the United Kingdom, Germany, Ireland, Canada, and Japan. We acquired Eucalyptus to expand our global operations into Australia and Japan and deepen our presence in the United Kingdom, Germany, Ireland, and Canada. The purchase price for accounting purposes was $968.5 million, including cash paid upfront of $225.0 million, deferred payments totaling $683.9 million payable in six quarterly installments through the 18-month anniversary of the closing, and contingent consideration with an acquisition date fair value of $59.6 million. The contingent consideration relates to a potential aggregate earn-out payment of up to $96.6 million, upon achievement of revenue and adjusted EBITDA targets with measurements occurring for each of the 2026, 2027, and 2028 fiscal years. We have the option, at our sole discretion, to settle a significant majority of the deferred consideration and earn-out payments in shares of our Class A common stock, subject to a cap on the aggregate number of shares issuable equal to 19.9% of our issued and outstanding Class A common stock, together with any securities issued or issuable in a financing by us in connection with the acquisition. No shares of our Class A common stock were issued at closing of the acquisition of Eucalyptus.
On July 1, 2026, XeCare LLC and Apostrophe Pharmacy LLC, each a wholly-owned subsidiary of our company (each a “RPA Seller” and, collectively, the “RPA Sellers”), entered into a Master Receivables Purchase Agreement (the “Receivables Purchase Agreement”) with JPMorgan Chase Bank, N.A., as purchaser (the “Purchaser”). The Receivables Purchase Agreement provides for an uncommitted facility with an initial aggregate limit of $400.0 million. Pursuant to the Receivables Purchase Agreement, each RPA Seller may, subject to the terms and conditions therein, offer to sell certain of its eligible receivables for cash to the Purchaser at a discount (for additional details see Note 20 – Subsequent Events to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q).
We had a working capital deficit of $98.6 million as of June 30, 2026, compared to a working capital surplus of $363.2 million as of December 31, 2025. The deficit as of June 30, 2026 was primarily due to the deferred consideration related to our acquisition of Eucalyptus during the second quarter of 2026. As discussed above, we have the option, at our sole discretion, to settle a significant majority of the deferred consideration in shares of our Class A common stock, subject to certain restrictions.
We believe our existing cash resources, as well as availability under our revolving credit facility, are sufficient to support planned operations for the next 12 months. As a result, management believes that our current and available financial resources are sufficient to continue operating activities for at least one year past the issuance date of the unaudited condensed consolidated financial statements.
Our future capital requirements will depend on many factors, including the number of orders we receive, the size of our customer base, the continuing market acceptance of telehealth, and the timing and extent of spend to support the expansion of
52
Table of Contents
sales, marketing, development activities, and our Facilities, which may be impacted by inflationary, recessionary, supply chain, or other macroeconomic factors, including the impact of trade actions. We expect to continue to pursue opportunities to expand our manufacturing and internal fulfillment capabilities, and may acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. From time to time, we order inventory with sufficient lead time in order to ensure our ability to fulfill customer demand for supply chain, seasonality, or other reasons, which may have an impact on our cash and cash equivalents in a given quarter. This may include purchases of inventory for our branded weight loss offerings, which would require upfront use of cash and cash equivalents prior to the settlement of any applicable manufacturer’s discount and rebate receivables related to the associated vendor supply agreements. We may also use our cash and cash equivalents to repurchase up to $225.0 million of our Class A common stock through November 11, 2028 at management’s discretion pursuant to our 2025 Share Repurchase Program. Additionally, as market conditions warrant, we may, from time to time, repurchase our outstanding Convertible Notes in the open market, in privately negotiated transactions, by tender offer, by exchange transaction, or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity, and other factors and may be commenced or suspended at any time. The amounts involved and total consideration paid may be material to the consolidated financial statements. We have based our estimate of our future capital requirements on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise or access additional capital when desired, our business, financial condition, and results of operations would be harmed.
Cash Flows
The following table provides a summary of cash flow data (in thousands):
Six Months Ended June 30,
2026 2025
Net cash provided by operating activities $ 53,417 $ 89,973
Net cash provided by (used in) investing activities 69,091 (53,884)
Net cash provided by financing activities 263,876 866,151
Cash flows from operating activities
Our largest source of operating cash flows is cash collections from our customers. Our primary use of cash from operating activities includes costs of revenue, marketing expenses, and personnel-related expenditures to support the growth of our business.
Net cash provided by operating activities was $53.4 million for the six months ended June 30, 2026. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $79.0 million, depreciation and amortization of $51.4 million, restructuring and other related charges included within cost of revenue of $28.5 million, change in fair value of liabilities of $21.9 million, non-cash acquisition-related costs of $21.3 million, change in fair value of equity securities of $4.9 million, amortization of debt discount and issuance costs of $3.7 million, and impairment of long-lived assets of $1.1 million, partially offset by a net loss of $178.4 million and benefit from deferred taxes of $23.3 million. In addition, a net cash inflow totaling $31.7 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in accounts payable and accrued liabilities of $413.3 million and an increase in deferred revenue of $3.0 million. This inflow was partially offset by an increase in receivables, net of $329.0 million, which was primarily related to increases in manufacturer’s discount and rebate receivables, an increase in other long-term assets of $30.6 million, an increase in inventory of $14.3 million, and a decrease in earn-out consideration of $7.1 million.
Net cash provided by operating activities was $90.0 million for the six months ended June 30, 2025. Net cash provided by operating activities included net income of $92.0 million, non-cash expense related to stock-based compensation of $60.6 million, and depreciation and amortization of $18.7 million. In addition, a net cash outflow totaling $77.2 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in inventory of $77.4 million and an increase in prepaid expenses and other current assets of $37.4 million. The increase in inventory was due to investment to help ensure we could continue meeting customer demand for our offerings, including our GLP-1 offerings, as well as investment related to our overall business growth. The increase in prepaid expenses and other current assets was driven primarily by prepayments for income taxes. This outflow was partially offset by an increase in deferred revenue of $23.1 million and an increase in accounts payable and accrued liabilities of $16.9 million.
53
Table of Contents
Cash flows from investing activities
Cash flows from investing activities primarily relate to our treasury operations of investing in available-for-sale investments and acquisitions, as well as purchases of property, equipment, and intangible assets and investment in website development and internal-use software. Our purchases of property, equipment, and intangible assets have increased in recent years as we scale our fulfillment capabilities to supply the increasing demand for our offerings.
Net cash provided by investing activities for the six months ended June 30, 2026 was $69.1 million, which was due to net investment cash inflows of $467.0 million. This inflow was partially offset by $318.1 million for the acquisition of businesses, net of cash acquired, related to the Eucalyptus acquisition and YourBio merger, $55.8 million in purchases of property, equipment, and intangible assets, investments of $12.8 million in website development and internal-use software, and $11.2 million in purchases of equity securities.
Net cash used in investing activities for the six months ended June 30, 2025 was $53.9 million, which was primarily due to $101.4 million in purchases of property, equipment, and intangible assets, including the cash payments made in connection with the C S Bio Co. asset acquisition, investments of $8.0 million in website development and internal-use software, and $5.1 million for the acquisition of a business, net of cash acquired. This cash outflow was partially offset by $60.6 million in maturities of investments.
Cash flows from financing activities
Net cash provided by financing activities for the six months ended June 30, 2026 was $263.9 million, which was primarily due to proceeds from issuance of convertible senior notes, net of debt discount of $390.4 million, proceeds from exercise of vested stock options of $13.0 million, and proceeds from employee stock purchase plan of $3.8 million. This cash inflow was partially offset by payments for taxes related to net share settlement of equity awards of $62.3 million, payments for acquisition-related earn-out consideration of $43.7 million, and purchases of capped calls related to convertible senior notes of $36.7 million.
Net cash provided by financing activities for the six months ended June 30, 2025 was $866.2 million, which was primarily due to proceeds from issuance of convertible senior notes, net of debt discount of $970.0 million, proceeds from exercise of vested stock options of $6.5 million, and proceeds from employee stock purchase plan of $3.0 million. This cash inflow was partially offset by payments for taxes related to net share settlement of equity awards of $62.5 million, purchases of capped calls related to convertible senior notes of $47.8 million, and payments for debt issuance costs of $3.0 million.
Contractual Obligations and Commitments
Our contractual obligations and commitments include operating leases, earn-out consideration, deferred acquisition payable, and non-cancelable purchase obligations with remaining terms in excess of one year primarily related to cloud-based software contracts used in operations and minimum commitments for inventory purchases. Total contractual obligations and commitments as of June 30, 2026 were $1,195.6 million, of which $662.3 million was payable within 12 months.
Critical Accounting Estimates
The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in our financial statements and accompanying notes. Management believes that the estimates, judgments, and assumptions upon which it relies are reasonable based upon information available to it at the time that these estimates, judgments, and assumptions were made. Actual results may differ from management’s estimates. To the extent that there are material differences between these estimates and actual results, our unaudited condensed consolidated financial statements will be affected.
For a discussion of our critical accounting estimates, please refer to Item 7 under Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report for the year ended December 31, 2025. Since December 31, 2025, there have been no material changes to our critical accounting estimates.
54
Table of Contents