To The Moon

Hims & Hers is poised to raise up to $1 billion through a convertible notes offering, providing the company with a substantial runway to fuel growth and seize strategic opportunities. This capital could enable acquisitions of competitors, suppliers, or testing and production companies, as well as significant investments in artificial intelligence (AI), a key focus area for the company. Below, I dive into the details of this capital raise, the recent hiring of a new CTO, and how these moves position Hims & Hers as a modern healthcare platform powered by AI. $Hims & Hers Health Inc.(HIMS)$ 

The Capital Raise: A $470M Convertible Notes Offering (with Upsizing Potential)

After the market closed on Wednesday, Hims & Hers announced an upsized $470 million convertible notes offering, with the potential to reach $1 billion when including an additional $130 million over-allotment option. Initially set at $450 million, the upsizing reflects strong investor demand, underscored by the zero-percent coupon rate—a clear signal of bullish sentiment from debt investors. These notes mature on May 15, 2030, with no interest payments, and are convertible into stock at a rate of 14.1493 shares per $1,000 bond, equating to a conversion price of approximately $70.67 per share.

For investors, this structure offers a lower-risk way to gain exposure to Hims & Hers’ upside. If the stock price surges to, say, $100 or $200 per share, bondholders can convert their debt at $70.67 per share and capture significant gains. If the stock underperforms, investors still get their $1,000 principal back at maturity. Additionally, a $41.6 million capped call transaction limits dilution by capping the conversion price at $89.95 per share, reducing potential pressure on the stock if it appreciates significantly. Net proceeds are estimated at $968.8 million, providing ample capital for Hims & Hers’ ambitious plans.

The company stated that the funds will accelerate global expansion and enhance AI utilization in healthcare. While no definitive acquisition agreements have been announced, the capital positions Hims & Hers to pursue strategic M&A or organic growth opportunities.

Strategic CTO Hire: A Focus on AI and Safety

On Tuesday, Hims & Hers announced the appointment of Amal Shanawani as CTO, bringing over two decades of experience, including a stint as CTO at Cruise, a leader in autonomous driving. This hire is particularly significant given the parallels between autonomous driving and healthcare, where safety is paramount. CEO Andrew Dudum emphasized that Shanawani’s experience in running AI systems in a safety-critical industry translates well to healthcare, where precision and trust are non-negotiable.

Shanawani’s leadership is expected to drive advancements in Hims & Hers’ data pipeline, AI tools, and personalized treatment offerings. The goal is to create a smarter, end-to-end consumer health experience—from intake and diagnosis to treatment and ongoing support. This aligns with the company’s vision to become a modern healthcare platform that leverages AI to elevate health and wellness experiences.

AI in Healthcare: A Differentiated Approach

Hims & Hers’ focus on AI is not about replicating general-purpose models like ChatGPT but building HIPAA-compliant, healthcare-specific AI solutions. For example, their weight loss offerings, including partnerships with Novo Nordisk for Wegovy and personalized semaglutide solutions, are just the start. AI could enable Hims & Hers to offer holistic, personalized plans that integrate prescriptions with workout routines, nutrition guidance, progress tracking, and ongoing support. This level of personalization is where AI can add significant value, differentiating Hims & Hers from competitors.

While specific details about their AI roadmap remain limited, the combination of Shanawani’s expertise and the massive capital raise suggests Hims & Hers is preparing to build robust, proprietary AI capabilities tailored to healthcare.

Strategic Implications: Global Expansion and Aggregation

The $1 billion capital raise positions Hims & Hers to pursue several strategic objectives:

Global Expansion: Hims & Hers has begun expanding internationally, leveraging its U.S.-built technology to enter new markets. The capital could fund partnerships with global suppliers or organic growth to capture demand worldwide.

Acquisitions: While small acquisitions could be funded with existing cash, this capital enables larger, transformative deals to acquire competitors or complementary businesses, strengthening their market position.

Technology Investment: Under Shanawani’s leadership, Hims & Hers is likely to double down on AI and data infrastructure to enhance personalization and consumer health experiences.

Hims & Hers aims to become an aggregator in healthcare, akin to Netflix in entertainment or Uber in ride-sharing. By consolidating demand, they can create a platform where suppliers like Novo Nordisk and Eli Lilly must partner to reach customers. This aggregator model is powerful but requires significant upfront investment to scale quickly and outpace competitors. The $1 billion raise signals Hims & Hers’ commitment to capturing this multi-hundred-billion-dollar opportunity.

Why This Matters for Investors

This capital raise and strategic focus on AI make Hims & Hers an exciting opportunity for investors. The zero-percent convertible notes reflect strong investor confidence, while the capped call transaction mitigates dilution risks. The company’s push into AI-driven healthcare, led by a seasoned CTO, positions it to redefine the consumer health experience. Whether through global expansion, strategic acquisitions, or technological innovation, Hims & Hers is laying the groundwork for significant growth.

Over the next year, I’ll be closely watching how Hims & Hers deploys this capital, particularly in AI and international markets. This move amplifies their upside potential, making them a compelling player in the evolving healthcare landscape.

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