| Item 2.02 | Results of Operations and Financial Condition |
The information set forth under Item 4.02(a) is incorporated into this Item 2.02 by reference.
| Item 4.02(a) | Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review |
On April 12, 2021, the Staff of the Securities and Exchange Commission (the “SEC”) issued a public statement (the “Staff Statement”) that highlighted the complex nature of warrants issued in connection with the formation and initial public offering of a special purpose acquisition company (“SPAC”) and the potential related accounting and reporting considerations. The Staff Statement informed market participants that warrants issued by SPACs may require classification as a liability of the entity measured at fair value, rather than equity.
Based on the Staff Statement, Hims & Hers Health, Inc. (the “Company”) re-evaluated the accounting treatment of the public warrants and private placement warrants (collectively, the “Warrants”) issued in connection with the initial public offering of Oaktree Acquisition Corp. (“OAC”), a SPAC, and recorded in the Company’s consolidated financial statements. The Company concluded that the Warrants did not meet the conditions to be classified within equity under the Staff Statement and should have been presented as a liability and marked to fair value each reporting period. Company management conducted this re-evaluation in consultation with WithumSmith+Brown, PC, the independent registered public accounting firm of OAC during the Non-Reliance Periods (as defined below), as well as an independent valuation expert and the Company’s current independent registered public accounting firm, KPMG LLP.
The historical financial statements of Hims, Inc. are not affected by the Staff Statement. As previously announced, Hims, Inc. and OAC completed their merger on January 20, 2021. Immediately following the merger, OAC changed its name to Hims & Hers Health, Inc. Consistent with industry practice among SPACs, OAC had been accounting for the Warrants within equity, and recorded the Warrants as equity classified in its pre-merger, historical consolidated financial statements. Because the merger was consummated on January 20, 2021, the Form 10-Q for the quarter in which the transaction closed has not yet been filed. However, consistent with the Staff Statement, the Company intends to restate the historical financial statements of OAC such that the Warrants are accounted for as liabilities and marked-to-market each applicable reporting period.
On May 3, 2021, the Company’s board of directors, after considering the recommendations of management and the audit committee (the “Audit Committee”) of the Company’s board of directors, determined that in light of the Staff Statement it was appropriate for the Company to restate the following financial statements previously filed with the SEC: (i) its audited financial statements as of December 31, 2020 and 2019, for the year ended December 31, 2020 and for the period from April 9, 2019 (inception) through December 31, 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and (ii) the condensed consolidated unaudited financial statements included in the Company’s Quarterly Reports on Form 10-Q for (a) the three months ended March 31, 2020, (b) the three and six months ended June 30, 2020, and (c) the three and nine months ended September 30, 2020, the three months ended September 30, 2019 and the period from April 9, 2019 (inception) through September 30, 2019 (collectively, the “Non-Reliance Periods”). Accordingly, the financial statements referred to in the preceding sentence should not be relied upon. Similarly, the related press releases, the Report of the Independent Registered Public Accounting Firm on the financial statements as of December 31, 2020 and 2019, for the year ended December 31, 2020 and the period from April 9, 2019 (inception) through December 31, 2019 and the stockholder communications describing the relevant portions of the Company’s financial statements for the Non-Reliance Periods should no longer be relied upon.
The Company is working diligently with its auditors and an independent valuation expert to finalize the valuation of the Warrants, and file an amendment to its Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K/A”) reflecting the reclassification of the Warrants for the Non-Reliance Periods as soon as practicable. The adjustments to the financial statement items for the Non-Reliance Periods will be set forth through disclosures in the financial statements included in the Form 10-K/A. In light of the restatement, the Company is reassessing the effectiveness of its disclosure controls and procedures and internal controls over financial reporting as of December 31, 2020. The Company’s management, board of directors and Audit Committee have discussed the matters disclosed in this Item 4.02(a) with WithumSmith+Brown, PC, the independent registered public accounting firm of OAC during the Non-Reliance Period, and the Company’s current independent registered public accounting firm, KPMG LLP.
