Hims & Hers (HIMS) shares fell 8.5% on Monday after the company said it plans to raise $300 million through a private offering of convertible senior notes due 2032. The move improves the telehealth company’s liquidity position, but also raises investors’ concerns that convertible debt could lead to share dilution.
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The company said the notes will be offered to qualified institutional buyers. Hims & Hers also expects to give the initial purchasers a 13‑day option to buy up to $45 million more in notes.
The notes will be senior, unsecured debt that matures in 2032, with interest paid semi‑annually. Holders will be able to convert the notes under certain conditions, and the company can settle conversions in cash, stock, or a mix of both.
The company plans to use the money for several key initiatives:
- International expansion, including its planned buyout of Eucalyptus, expected to close in mid-2026
- Upgrading tech and fulfillment to run more smoothly
- Building out its AI tools to improve the customer experience
- Strengthening its data system
- General corporate purposes, with some funds used for capped call deals to help lower dilution risk
BofA Says Offering Signals Margin Pressure Ahead
BofA analyst Allen Lutz cut his HIMS price target to $28 from $30 and kept a Hold rating. He said the offering supports his view that near‑term margins will stay under pressure as the company moves into new markets. He also pointed to dilution and lower peer multiples as reasons for trimming his target.
Lutz noted that the Eucalyptus deal makes up a big part of the company’s cash needs. He added that global expansion will not lift profits right away and that spending may run higher than Wall Street expected. Because of this, long‑term EBITDA estimates may face downside risk.
He also highlighted that the Street expects Hims & Hers to reach nearly $400 million in EBITDA by 2027. He believes the goal is too hopeful unless the company gets strong help from its global push or sees major margin gains from the Novo Nordisk (NVO) GLP‑1 launch.
It is worth noting that Lutz ranks 970 out of more than 12,237 analysts tracked by TipRanks. He has an overall success rate of 85% on HIMS stock, with an average return per rating of 41.51% over a one-year timeframe.
Is Hims and Hers Stock a Buy?
Turning to Wall Street, HIMS stock has a Moderate Buy consensus rating based on 5 Buys and 11 Holds assigned in the last three months. At $29.22, the average Hims and Hers stock price target implies a 28.12% upside potential.
