Hims’ Oaktree deal is official. The telemedicine company will go public by merging with Oaktree Acquisition, valuing Hims at $1.6 billion. Partnering with a special purpose acquisition company is a path that’s become more common among startups on their way to the public market, in lieu of a traditional IPO. With IPOs come S-1s, and through S-1s a company’s inner workings are entirely laid bare.
Oaktree also then becomes the shell company, protecting Hims financially from the volatility of the market. Through Hims, Oaktree Capital Management, the financial firm that owns the SPAC, will get a piece of the telemedicine sector, which is booming post-pandemic. Hims, which is best known for its hair loss treatments, has branched out to cover more common prescriptions, like birth control and acne medication. The network of healthcare professionals that Hims connects customers to via its telemedicine service has become the brand’s moat. More than just consumer products, Hims has a medicine company behind it, and the need for virtual appointments exploded this year.
With that value proposition, Hims has succeeded during a period where many other DTC companies – and retailers in general – have been hit hard. Telemedicine is going to keep growing, and if Hims can maintain a solid reputation throughout, it’s positioned to win with both more traditional players and younger customers. At the same time, the SPAC route, which has helped to usher in other companies like DraftKings to the public market, gets another DTC proponent. As more companies consider their exits, this workaround to trading could become more common.
By Hilary Milnes