Hims & Hers Health (HIMS) risk factors, 2025 10-K

Other

1. 01Summary of Principal Risk Factors
2. 02conditions capable of being treated through our platform, our business, financial condition, and results of operations may be materially and adversely affected

Risks Related to Our Business

1. 03We have experienced rapid growth in recent fiscal years and expect to continue to invest in our growth for the foreseeable future. High levels of growth may not be achieved in future periods and may not generate a corresponding improvement in our results of operations
2. 04few years, from 651 employees as of December 31, 2022 to 1,637 employees as of December 31, 2024. We have also completed multiple acquisitions, expanded into new specialties, and significantly increased the size of our customer base
3. 05enhancements to our existing products and services is difficult to predict, and we may not launch new offerings and updates as rapidly as our current or prospective customers require or expect
4. 06If we are unable to successfully market to new customers and retain existing customers, or if evolving privacy, healthcare, or other laws or regulations prevent or limit our marketing activities, our business, financial condition, and results of operations could be harmed
5. 07Use of social media and celebrity influencers may materially and adversely affect our reputation or subject us to fines or other penalties
6. 08If we are unable to continue to expand our marketing infrastructure, we may fail to increase the usage of our platform to meet our forecasts
7. 09Our brand is integral to our success. If we fail to effectively maintain, promote, and enhance our brand in a cost-effective manner, our business and competitive advantage may be harmed
8. 10The failure of our offerings to achieve and maintain market acceptance could result in us achieving revenue below our expectations, which could cause our business, financial condition, and results of operations to be materially and adversely affected
9. 11The market for our model and services is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change and consolidation, which makes it difficult to forecast demand for our solutions
10. 12Competitive platforms or other technological breakthroughs for the monitoring, management, treatment, or prevention of medical conditions may adversely affect demand for our offerings
11. 13We operate in highly competitive markets and face competition from large, well-established healthcare providers, traditional retailers, pharmaceutical providers, and technology companies with significant resources, and, as a result, we may not be able to compete effectively
12. 14New competitors or alliances may emerge that have greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, and greater financial resources, which could put us at a competitive disadvantage
13. 15We are dependent on our relationships with the Affiliated Medical Groups, which we do not own, to provide healthcare consultation services, and our business could be adversely affected if those relationships were disrupted
14. 16The activities and quality of Providers treating our customers and Facilities performing fulfillment and distribution, including any potentially unethical or illegal practices, could damage our brand, subject us to liability, and harm our business and financial results
15. 17Any failure to offer high-quality support may adversely affect our relationships with customers and Providers, and in turn our business, financial condition, and results of operations
16. 18Our business could be adversely affected if Providers were classified as employees of the Affiliated Medical Groups instead of independent contractors
17. 19Expansion into international markets is important for our long-term growth, and as we expand internationally, we will face additional business, political, legal, regulatory, operational, financial, and economic risks, any of which could increase our costs and hinder such growth
18. 20Economic uncertainty or downturns, particularly as it impacts particular industries, could adversely affect our business, financial condition, and results of operations
19. 21If we are unable to deliver a rewarding experience on mobile devices, whether through our mobile website or our mobile applications, we may be unable to attract and retain customers
20. 22Our business depends on continued and unimpeded access to the internet and mobile networks
21. 23Any disruption of service at Amazon Web Services, Partner Pharmacies, or other third-party service providers could interrupt access to our platform or delay our customers’ ability to seek treatment
22. 24We depend on a number of third parties to perform functions critical to our ability to operate our platform, generate revenue from customers, and to perform many of the related functions
23. 25Disruption in our global supply chain, supply chain concentration, and changes to tax or trade policy could negatively impact our business
24. 26Our pharmacy business subjects us to additional healthcare laws and regulations beyond those we face with our core telehealth business, and increases the complexity and extent of our compliance and regulatory obligations
25. 27Our payments system depends on third-party service providers and is subject to evolving laws and regulations
26. 28Our pricing decisions may adversely affect our ability to attract new customers, Providers, and other partners, or may otherwise impact our revenue and profitability
27. 29Our success depends on the continuing and collaborative efforts of our management team, and our business may be severely disrupted if we lose their services
28. 30We depend on our talent to grow and operate our business, and if we are unable to hire, integrate, develop, motivate, and retain our personnel, we may not be able to grow effectively
29. 31resources, particularly for engineers with expertise in areas like programming, machine learning and artificial intelligence, is intense
30. 32A significant portion of our inventory is stored in our Ohio facility, and we also hold inventory in our Arizona facilities, at MedisourceRx, and from time to time with third party logistics providers, and any damage or disruption at any facility or with any third party logistics provider may harm our business

Risks Related to Governmental Regulation

1. 33If we fail to comply with applicable healthcare and/or other laws and governmental regulations, we could face substantial penalties, our business, financial condition, and results of operations could be adversely affected, and we may be required to restructure our operations
2. 34successfully defended, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business
3. 35licensure requirements applicable to entities engaging in the distribution of prescription medical devices and products depending on how we integrate the laboratory services into our current customer offerings
4. 36If our business practices are found to violate federal or state anti-kickback, physician self-referral, or false claims laws, we may incur significant penalties and reputational damage that could adversely affect our business
5. 37Legislative and regulatory changes specific to the area of telehealth or pharmacy law may present the Affiliated Medical Groups and/or the Pharmacies with additional requirements and state compliance costs, which may create additional operational complexity and increase costs
6. 38Evolving government regulations and enforcement activities may require increased costs or adversely affect our results of operations
7. 39There could be laws and regulations applicable to our business that we have not identified or that, if changed, may be costly to us, and we cannot predict all the ways in which implementation of such laws and regulations may affect us
8. 40Changes in public policy, including those that mandate or enhance healthcare coverage, could have a material adverse effect on our business, operations, and results of operations
9. 41Changes in insurance and healthcare laws, as well as the potential for further healthcare reform legislation and regulation, have created uncertainty in the healthcare industry and could materially affect our business, financial condition, and results of operations
10. 42our ability to market compounded drugs that have the same active ingredients and route of administration as FDA-approved drugs
11. 43Although we believe our products meet the requirements for the statutory exemptions in 503A and 503B, changes to the regulatory requirements for compounding GLP-1 products may adversely impact our financial conditions and business operations, and we cannot predict such changes
12. 44The information that we provide to Providers, customers, and our partners could be inaccurate or incomplete, which could harm our business, financial condition, and results of operations
13. 45Public scrutiny of internet privacy and security issues may result in increased regulation or enforcement and/or different industry standards, which could deter or prevent us from providing services to our customers, thereby harming our business
14. 46Security breaches, loss of data, and other disruptions could compromise sensitive information related to our business or customers, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation
15. 47Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws could subject us to penalties and other adverse consequences

Risks Related to Intellectual Property and Legal Proceedings

1. 48Failure to protect or enforce our intellectual property rights could harm our business and results of operations
2. 49seek to pursue such protection in every jurisdiction. In particular, we believe it is important to maintain, protect, and enhance our brand
3. 50We may in the future be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate
4. 51From time to time, we are subject to legal proceedings in the ordinary course of business, which can include intellectual property disputes or claims related to our marketing or sale of products, any of which may be costly to defend and could materially harm our business and results of operations
5. 52Changes in accounting rules, assumptions, or judgments could materially and adversely affect us
6. 53We face the risk of product liability claims and may not be able to maintain or obtain insurance
7. 54Our business could be disrupted by catastrophic events and man-made problems, such as power disruptions, data security breaches, and terrorism

Risks Related to Our Results of Operations and Additional Capital Requirements

1. 55We may not be able to maintain our profitability
2. 56Our results of operations, as well as the performance of our key metrics, may fluctuate on a quarterly and annual basis, which may result in us failing to meet the expectations of industry and securities analysts or our investors
3. 57We rely significantly on revenue from customers purchasing subscription-based prescription products and services and may not be successful in expanding our offerings
4. 58The requirements of being a public company have and may continue to strain our resources, divert management’s attention, and may result in litigation
5. 59Further, in addition to being costly and time-consuming, any environmental, social and governance (“ESG”)-related disclosures we make may not meet investor expectations or attract additional investments in us, which could result in a decrease in the market price for our Class A common stock
6. 60We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all
7. 61If our estimates or judgments relating to our significant accounting policies prove to be incorrect, our results of operations could be adversely affected
8. 62Adverse tax laws or regulations could be enacted or existing laws could be applied to us or our customers, which could subject us to additional tax liability and related interest and penalties, increase the costs of our offerings, and adversely impact our business
9. 63Certain U.S. state tax authorities may assert that we have state nexus and seek to impose state and local income taxes which could harm our results of operations

Risks Related to Ownership of our Securities

1. 64Our dual class common stock structure has the effect of concentrating voting power with our Chief Executive Officer and Co-Founder, Andrew Dudum, which limits an investor’s ability to influence the outcome of important transactions, including a change in control
2. 65As a “controlled company” within the meaning of NYSE listing standards, we qualify for exemptions from certain corporate governance requirements. We have the opportunity to elect any of the exemptions afforded a controlled company
3. 66Delaware law and our certificate of incorporation and bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
4. 67In addition, our certificate of incorporation includes a provision substantially similar to Section 203 of the DGCL, which may prohibit certain stockholders holding 15% or more of our outstanding capital stock from engaging in certain business combinations with us for a specified period of time
5. 68The market price of our Class A common stock may be volatile
6. 69The sale or the perception of future sales of a substantial number of shares of our Class A common stock could cause the market price of our Class A common stock to drop significantly, even if our business is doing well
7. 70Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the market price and trading volume of our Class A common stock