Hims & Hers Health Inc.
02/23/2026 | Press release | Distributed by Public on 02/23/2026 16:21
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K. This section of the Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025and 2024. Discussions of 2023 items and year-to-year comparisons between 2024and 2023 are not included in this Form 10-K, and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. Our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should not rely on forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we do not intend to update any of these forward-looking statements after the date hereof or to conform these statements to actual results or revised expectations. Forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled "Risk Factors" in this Form 10-K.
Unless otherwise indicated or the context otherwise requires, references in this discussion and analysis to "we," "us," "our," the "Company," and "Hims & Hers" refer to Hims & Hers Health, Inc. and its subsidiaries and variable interest entities.
Overview
Hims & Hers is a consumer-first platform transforming the way customers fulfill their health and wellness needs. Our mission is to help the world feel great through the power of better health. We believe that we have the technical infrastructure, distributed provider network, and access to clinical capabilities to lead the migration of routine office visits to a personalized,
digital, accessible format. The Hims & Hers platforms (collectively, our "platform") include access to a highly-qualified and technologically-capable provider network, a clinically-focused electronic medical records system, digital prescriptions, cloud-enabled pharmacy fulfillment, and personalization capabilities. Our digital platform enables access to treatments for a broad range of conditions, including primarily those related to sexual health, hair loss, hormone health, weight loss, dermatology, and mental health, as well as services such as comprehensive laboratory testing. Hims & Hers connects patients to licensed healthcare professionals who can prescribe medications when appropriate. Prescriptions are fulfilled online through licensed pharmacies, making accessing treatments simple, affordable, and straightforward. Through the Hims & Hers mobile applications, consumers can access a range of educational programs, wellness content, community support, and other services that promote lifelong health and wellness.
In addition, we offer access to a range of health and wellness products designed to meet individual needs, which can include curated prescription and non-prescription products. Our products and services are available for purchase directly by customers on our websites and mobile applications. Additionally, Hims & Hers non-prescription products can be found in tens of thousands of top retail locations in the United States.
Recent Developments
In February 2026, Horizon BidCo Pty Ltd ACN 694 778 375 (the "Purchaser"), an Australian proprietary company and wholly-owned subsidiary of our company, entered into a Securities Sale Deed (the "Deed") by and among our company, Hims, Inc., the Purchaser and the sellers named therein, to purchase all of the issued capital of EUC Management Pty Ltd ACN 631 013 860 (d/b/a Eucalyptus) ("Eucalyptus"), an Australia-based digital health company that operates in Australia, the United Kingdom, Germany, Canada, and Japan. The aggregate total consideration of the transaction is up to $1.15 billion, subject to certain adjustments set forth in the Deed (the "Proposed Acquisition"). We entered into the Proposed Acquisition to expand into Australia and Japan and deepen our presence in the United Kingdom, Germany, and Canada. The upfront cash consideration payable at closing is approximately $240 million, not including certain closing adjustments as set forth in the Deed. Deferred payments totaling an additional amount of approximately $710 million, not including certain closing adjustments as set forth in the Deed, are payable in sixquarterly installments through the 18-month anniversary of the closing. A maximum additional amount of approximately $200 million in earn-out payments, not including certain closing adjustments as set forth in the Deed, are payable following the release of our results for each of fiscal years 2026, 2027, and 2028, respectively, upon Eucalyptus achieving certain revenue and adjusted EBITDA targets. We have the option to settle approximately 60% of the deferred and earn-out payments in cash or our Class A common stock, at our election. The Proposed Acquisition is subject to customary closing conditions and is expected to close in mid-2026.
Revenue and Key Business Metrics
Our management monitors certain financial results to track our total revenue generation. Historically, we have disaggregated our total revenue between Online Revenue and Wholesale Revenue (both defined below). During 2025, as a result of completed acquisitions, we launched operations in the European Union and Canada, and deepened our presence in the United Kingdom. We expect to continue to expand internationally, including in connection with our Proposed Acquisition of Eucalyptus. As a result, beginning with this Annual Report on Form 10-K, we are now disaggregating our total revenue between United States Revenue and Rest of the World Revenue (both defined below). Additionally, Online Revenue and Wholesale Revenue have become a less relevant disaggregation of our total revenue, and we anticipate no longer reporting these financial results beginning with the three months ending March 31, 2026. We also monitor the additional key business metrics set forth below to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. Increases or decreases in these key business metrics may not correspond with increases or decreases in our revenue. We continually and strategically review our key business metrics to ensure that they are helpful in managing or monitoring the performance of our business as it grows, which may result in changes in our key business metrics over time. As an example, Monthly Online Revenue per Average Subscriber (as defined below) has become less relevant for our business. We anticipate no longer reporting this metric beginning with the three months ending March 31, 2026, and are instead reporting Monthly Revenue per Average Subscriber, as defined below, beginning with this Annual Report on Form 10-K.
The limitations our key business metrics have as an analytical tool include: (i) they might not accurately predict our future financial results pursuant to accounting principles generally accepted in the United States of America ("U.S. GAAP"); and (ii) other companies, including companies in our industry, may calculate our key business metrics or similarly titled measures differently, which reduces their usefulness as comparative measures.
Brief descriptions of our key business metrics are provided below.
"United States Revenue" represents the sales of products and services by our consolidated legal entities operating within jurisdictions located inside of the United States.
"Rest of the World Revenue" represents the sales of products and services by our consolidated legal entities operating within jurisdictions located outside of the United States.
"Online Revenue" represents the sales of products and services on our platform, net of refunds, credits, and chargebacks, and includes revenue recognition adjustments recorded pursuant to U.S. GAAP, primarily relating to deferred revenue and returns reserve. Online Revenue is generated by selling directly to consumers through our websites and mobile applications. Our Online Revenue consists of products and services purchased by customers directly through our online platform. The majority of our Online Revenue is subscription-based, where customers agree to be billed on a recurring basis to have products and services automatically delivered to them. Online Revenue also includes sales from customers who have made one-time purchases.
"Wholesale Revenue" represents non-prescription product sales to retailers through wholesale purchasing agreements. Wholesale Revenue also includes non-prescription product sales to third-party platforms through consignment arrangements. In addition to being revenue generative and profitable, wholesale partnerships and consignment arrangements have the added benefit of generating brand awareness with new customers in physical environments and on third-party platforms.
"Subscribers" are customers who have one or more "Subscriptions" pursuant to which they have agreed to be automatically billed on a recurring basis at a defined cadence. The Subscription billing cadence is typically defined as a number of days (for example, billed every 30 days or every 90 days), which are excluded from our reporting when payment has not occurred at the contracted billing cadence. Subscribers can cancel or snooze Subscriptions in between billing periods to stop receiving additional products and/or services and can reactivate Subscriptions to continue receiving additional products and/or services. Customers who have made one-time purchases are not considered Subscribers.
"Monthly Revenue per Average Subscriber" is defined as total revenue divided by "Average Subscribers", which amount is then further divided by the number of months in a period. "Average Subscribers" are calculated as the sum of the Subscribers at the beginning and end of a given period divided by 2.
"Monthly Online Revenue per Average Subscriber" is defined as Online Revenue divided by Average Subscribers, which amount is then further divided by the number of months in a period.
The table below provides a breakdown of total revenue between (i) United States Revenue and Rest of the World Revenue and (ii) Online Revenue and Wholesale Revenue, for the years ended December 31, 2025, 2024, and 2023, as well as key metrics that drive total revenue and Online Revenue (i.e., Subscribers, Monthly Revenue per Average Subscriber, and Monthly Online Revenue per Average Subscriber) and the dollar and percentage change between such periods (in thousands, except for Monthly Revenue per Average Subscriber and Monthly Online Revenue per Average Subscriber):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | Change | % Change | 2024 | Change | % Change | 2023 | ||||||||||||||||||||||||||||||||||||||
| United States Revenue | $ | 2,213,648 | $ | 763,977 | 53 | % | $ | 1,449,671 | $ | 595,177 | 70 | % | $ | 854,494 | ||||||||||||||||||||||||||||||
| Rest of the World Revenue | 133,989 | 107,146 | 399 | % | 26,843 | 9,337 | 53 | % | 17,506 | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | 2,347,637 | $ | 871,123 | 59 | % | $ | 1,476,514 | $ | 604,514 | 69 | % | $ | 872,000 | ||||||||||||||||||||||||||||||
| Online Revenue | $ | 2,311,449 | $ | 873,512 | 61 | % | $ | 1,437,937 | $ | 595,556 | 71 | % | $ | 842,381 | ||||||||||||||||||||||||||||||
| Wholesale Revenue | 36,188 | (2,389) | (6) | % | 38,577 | 8,958 | 30 | % | 29,619 | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | 2,347,637 | $ | 871,123 | 59 | % | $ | 1,476,514 | $ | 604,514 | 69 | % | $ | 872,000 | ||||||||||||||||||||||||||||||
| Subscribers (end of period) | 2,511 | 282 | 13 | % | 2,229 | 692 | 45 | % | 1,537 | |||||||||||||||||||||||||||||||||||
| Monthly Revenue per Average Subscriber | $ | 83 | $ | 18 | 28 | % | $ | 65 | $ | 9 | 16 | % | $ | 56 | ||||||||||||||||||||||||||||||
| Monthly Online Revenue per Average Subscriber | $ | 81 | $ | 17 | 27 | % | $ | 64 | $ | 10 | 19 | % | $ | 54 | ||||||||||||||||||||||||||||||
We generated $2,213.6 million in United States Revenue for the year ended December 31, 2025, an increase of $764.0 million, or 53%, as compared to $1,449.7 million for the year ended December 31, 2024. Growth in United States Revenue for the year ended December 31, 2025 was primarily driven by: (i) newer offerings, including expansion of our personalized offerings and Hers brand, which led to new Subscriber growth; and (ii) continued sustainable growth in Subscribers pertaining to mature offerings, from whom we generated recurring revenue that was driven in part by ordinary-course marketing campaigns that continued to strengthen our mature offerings. During the year ended December 31, 2025, our personalized offerings represented over 70% of United States Revenue, compared to representing approximately half of United States Revenue for the year ended December 31, 2024. Our personalized offerings refer to treatment plans developed by licensed providers to meet the specific needs of individual customers and may include certain compounded formulations. We expect revenue from personalized offerings, including existing and new offerings, to increasingly drive United States Revenue growth in the future. Additionally, during the year ended December 31, 2025, our Hers brand represented nearly 40% of United States Revenue, compared to representing less than 30% of United States Revenue for the year ended December 31, 2024. Growth in the Hers brand was driven by our glucagon-like peptide-1 receptor agonists ("GLP-1s") and dermatology offerings, including personalized offerings. For the year ended December 31, 2025, a majority of our total United States Revenue came from non-GLP-1 offerings. We generated $1,449.7 million in United States Revenue for the year ended December 31, 2024, an increase of $595.2 million, or 70%, as compared to $854.5 million for the year ended December 31, 2023. Growth in United States Revenue for the year ended December 31, 2024 was primarily driven by offerings launched in the fourth quarter of 2023 or later, including new offerings launched in the second quarter of 2024 for which there was no comparable revenue in 2023, as well as continued sustainable growth in Subscribers pertaining to offerings available in all periods presented, from whom we generated recurring revenue. Offerings available in both periods represented a substantial majority of United States Revenue for the year ended December 31, 2024. United States Revenue can fluctuate on a period-to-period basis due to various factors, including launches of new product offerings, the success of our marketing campaigns, and pricing decisions impacting customer uptake of our offerings, as well as product availability and the regulatory landscape impacting our offerings.
We generated $134.0 million in Rest of the World Revenue for the year ended December 31, 2025, an increase of $107.1 million, or 399%, as compared to $26.8 million for the year ended December 31, 2024. Growth in Rest of the World Revenue for the year ended December 31, 2025 was primarily driven by the geographic expansion from our recent acquisitions. We generated $26.8 million in Rest of the World Revenue for the year ended December 31, 2024, an increase of $9.3 million, or 53%, as compared to $17.5 million for the year ended December 31, 2023. Growth in Rest of the World Revenue for the year ended December 31, 2024 was primarily driven by Subscriber growth in the United Kingdom. Rest of the World Revenue can
fluctuate on a period-to-period basis due to various factors, including those related to United States Revenue discussed above, as well as the magnitude of any future geographic expansion.
We generated $2,311.4 million in Online Revenue for the year ended December 31, 2025, an increase of $873.5 million, or 61%, as compared to $1,437.9 million for the year ended December 31, 2024. Growth in Online Revenue for the year ended December 31, 2025 was primarily driven by the same factors as the United States Revenue growth discussed above.
We generated $36.2 million in Wholesale Revenue for the year ended December 31, 2025, a decrease of $2.4 million, or 6%, as compared to $38.6 million for the year ended December 31, 2024. Wholesale Revenue can fluctuate on a period-to-period basis due to various factors, including timing of inventory purchases from our partners, seasonality trends, launches of new merchants, and timing of specialized campaigns. During the year ended December 31, 2025, there were no launches of material new merchants, notable factors impacting timing of inventory purchases, or material specialized campaigns impacting Wholesale Revenue trends. Top partners, comprising over 90% of Wholesale Revenue, remained consistent for all periods presented. As our presence in physical environments and on third-party platforms has matured and we have successfully built brand awareness with new customers in those environments, we do not anticipate launching new material partnerships in the foreseeable future or investing significantly in specialized wholesale marketing campaigns.
Subscribers grew 13% to approximately 2,511,000 as of December 31, 2025 as compared to approximately 2,229,000 Subscribers as of December 31, 2024. Growth in Subscribers was primarily driven by increased traffic to our platform (through our websites and mobile applications) as a result of our marketing activities, including both ordinary-course marketing campaigns and a specialized campaign in the first quarter of 2025 as discussed further below, improved onsite and customer onboarding experiences, and consumer adoption of our personalized offerings across our business. In the first quarter of 2025, we aired a Super Bowl marketing campaign highlighting specialized offerings on our platform and building brand awareness with consumers in order to normalize health and wellness challenges. Monthly Revenue per Average Subscriber grew 28% to $83 for the year ended December 31, 2025 as compared to $65 for the year ended December 31, 2024, and Monthly Online Revenue per Average Subscriber grew 27% to $81 for the year ended December 31, 2025 as compared to $64 for the year ended December 31, 2024, primarily due to Subscriber uptake of personalized offerings across our business, along with changes in product mix and the impact of our recent acquisitions. Monthly Revenue per Average Subscriber grew 16% to $65 for the year ended December 31, 2024 as compared to $56 for the year ended December 31, 2023, primarily due to our weight loss offerings along with changes in product mix.
We continuously test and optimize the online experience and offerings to improve the customer experience, maximize sales, and improve gross margin. Our Subscribers (sometimes also referred to by us as "members") select a cadence at which they wish to receive product shipments or a treatment term depending on the offering. In addition to a 30-day cadence or treatment term, we offer Subscribers the ability to select from a range of Subscription shipment cadences or treatment terms, from every 60 days to 360 days, depending on the offering. Subscriptions automatically renew on the applicable cadence selected by the Subscriber when purchasing or updating the Subscription. To ensure timely delivery of prescription medications and in accordance with our terms and conditions, Subscribers may sometimes be charged, and products may sometimes be shipped, earlier than their regularly scheduled cadence to accommodate holidays or for other operational reasons to support continuity of treatment. With the exception of prepaid offerings, the Subscriber is typically billed upon each shipment. Subscribers can cancel or snooze Subscriptions in between billing periods to stop receiving additional products and can reactivate Subscriptions at any time. For longer term Subscriptions, we incur shipping and fulfillment expenses fewer times per year than for 30-day Subscriptions. The Subscriber uptake of longer term Subscriptions typically results in lower recurring costs and higher gross margins as compared to 30-day Subscriptions.
Key Factors Affecting Results of Operations
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges.
New customer acquisition
Our ability to attract new customers is a key factor for our future growth. To date, we have successfully acquired new customers through marketing and the development of our brands as well as through acquisitions. As a result, revenue has increased each year since our launch. If we are unable to acquire enough new customers in the future, revenue might decline. New customer acquisition could be negatively impacted if our marketing efforts are less effective in the future. Increases in
advertising rates could also negatively impact our ability to acquire new customers. Consumer tastes, preferences, and sentiment for our brands may also change and result in decreased demand for our products and services. Changes in the legal or regulatory environment have and could continue to impact our ability to acquire new customers, including changes to privacy, healthcare, or other laws, or the interpretation or enforcement of such laws, and could impact customer acquisition costs. In addition, acquiring new customers may be impacted by supply chain constraints related to our offerings that may be outside of our control and may impact our future results.
Retention of customers
Our ability to retain customers is a key factor in our ability to generate revenue. A majority of our customers purchase products and services through subscription-based plans, where Subscribers are billed and sent products and/or receive services on a recurring basis. The recurring nature of this revenue provides us with a certain amount of predictability for future revenue if past Subscriber behavior stays relatively consistent in the future. While historically the consistent uptake by Subscribers of our offerings contributed to the stable and predictable nature of our Monthly Revenue per Average Subscriber, some of our weight loss offerings have led to increases in this metric, though we expect this metric to normalize over the long term. We expect to retain a significant majority of revenue from Subscribers who maintain a Subscription for more than two years (sometimes referred to by us as "long-term revenue retention"). However, if customer behavior changes, or our assumptions regarding long-term revenue retention are incorrect and Subscriber retention decreases in the future, then future revenue will be negatively impacted. Macroeconomic factors including inflation or recessionary pressures or the impact of trade actions may affect the ability of our Subscribers to continue to pay for our products and services, which may also impact the future results of our operations.
Investments in growth
We expect to continue to focus on long-term growth. We intend to continue to invest in our fulfillment, distribution, and operating capabilities, including in our wholly-owned pharmacies (also referred to herein as our "Pharmacies"), our laboratory testing facilities and our peptide manufacturing facility (collectively with our Pharmacies sometimes herein referred to as our "Facilities"), with the goal of fulfilling a significant majority of our pharmaceutical and over-the-counter customer orders through internal fulfillment capabilities. For example, we are making investments in the expansion of our current Facilities, which are expected to continue for at least the next 12 months. Additionally, we expect to continue to make significant investments in marketing to acquire new customers across all of our brands, and we expect to continue to make investments in product offerings and customer experience. We are working to enhance our offerings and expand the breadth of health and wellness products and services offered on our websites and mobile applications. The number of our Subscribers using personalized solutions has grown in recent periods and represented more than a majority of Subscribers as of December 31, 2025. As we expect the percentage of Subscribers on our platform using a personalized solution to continue to increase, we expect revenue from personalized offerings across the business to increasingly drive total revenue growth in the future, and we plan to continue to invest in personalized product offerings, including in our compounding capabilities. In addition, we expect to continue to pursue opportunities to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. Specifically, in July 2025, weacquired all of the outstanding equity of Zava Global GmbH and its subsidiaries ("Zava"), a digital health platform registered in Germany with operations in the United Kingdom and the European Union, in November 2025, we acquired all of the outstanding equity of Medici Technologies, Inc. ("Medici"), a digital health platform registered in Canada, in January 2026, we completed a merger pursuant to which YourBio Health, Inc. ("YourBio"), a U.S.-based company specializing in capillary whole blood sampling technology, became our wholly-owned subsidiary, and in February 2026, we entered into the Proposed Acquisition of Eucalyptus(for additional details regarding these transactions refer to the "Recent Developments" and "Liquidity and Capital Resources" sections). In the short term, we expect these investments to increase our operating expenses; however, in the long term, we anticipate that these investments will positively impact our results of operations. If we are unsuccessful at improving our offerings or are unable to generate additional demand for our offerings, we may not recover the financial investments we make into the business and revenue may not increase in the future.
Expansion into new specialties
We expect to continue to expand into new health and wellness specialties with our offerings. Specialty expansion allows us to increase the number of health and wellness consumers for whom we can provide products and services. It also allows us to offer access to treatment of additional conditions that may already affect our current customers. Expanding into new health and wellness specialties has required and will continue to require financial investments in additional headcount, marketing and customer acquisition costs, additional operational capabilities, and may require the purchase of new inventory. If we are unable
to generate or maintain sufficient demand in new health and wellness specialties, we may not recover the financial investments we make into new specialties and revenue may not increase in the future.
Non-GAAP Financial Measures
In addition to our financial results determined in accordance with U.S. GAAP, we present Adjusted EBITDA (which is a non-GAAP financial measure), Adjusted EBITDA margin (which is a non-GAAP ratio), and Free Cash Flow (which is a non-GAAP financial measure) each as defined below. We use Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow, when taken together with the corresponding U.S. GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We consider Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow is helpful to our investors as they are used by management in assessing the health of our business, our operating performance, and our liquidity.
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures or ratios differently or may use other financial measures or ratios to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow as tools for comparison. Reconciliations are provided below to the most directly comparable financial measures stated in accordance with U.S. GAAP. Investors are encouraged to review our U.S. GAAP financial measures and not to rely on any single financial measure to evaluate our business.
Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. "Adjusted EBITDA" is defined as net income (loss) before stock-based compensation, depreciation and amortization, acquisition and transaction-related costs (which includes (i) consideration paid for employee and nonemployee compensation with vesting requirements incurred directly as a result of acquisitions, inclusive of revaluation of earn-out consideration recorded in general and administrative expenses prior to 2024, and (ii) transaction professional services), change in fair value of liabilities, payroll tax expense related to stock-based compensation, impairment of long-lived assets, legal settlement expenses that are considered non-recurring, change in fair value of equity securities, income taxes, and interest income and expense, net. "Adjusted EBITDA margin" is defined as Adjusted EBITDA divided by revenue.
In the second quarter of 2025, we revised our definition of Adjusted EBITDA to include payroll tax expense related to stock-based compensation, which comprises employer taxes incurred upon vesting of restricted stock units and upon exercise of nonqualified stock options. As a result of recent trends in our stock price, this amount was not considered significant for prior periods and, accordingly, prior period disclosures were not recast to conform to the current presentation.
The following table reconciles net income (loss) to Adjusted EBITDA for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Revenue | $ | 2,347,637 | $ | 1,476,514 | $ | 872,000 | ||||||||||||||
| Net income (loss) | 128,365 | 126,038 | (23,546) | |||||||||||||||||
| Stock-based compensation | 135,244 | 92,322 | 66,080 | |||||||||||||||||
| Depreciation and amortization | 54,502 | 17,088 | 9,515 | |||||||||||||||||
| Acquisition and transaction-related costs | 15,544 | 3,979 | 3,016 | |||||||||||||||||
| Change in fair value of liabilities | 9,255 | - | 1,075 | |||||||||||||||||
| Payroll tax expense related to stock-based compensation | 6,947 | - | - | |||||||||||||||||
| Impairment of long-lived assets | 531 | 114 | 429 | |||||||||||||||||
| Legal settlement | - | 2,008 | - | |||||||||||||||||
| Change in fair value of equity securities | (4,437) | - | - | |||||||||||||||||
| (Benefit from) provision for income taxes | (4,441) | (54,327) | 1,975 | |||||||||||||||||
| Interest income and expense, net | (23,526) | (10,349) | (9,029) | |||||||||||||||||
| Adjusted EBITDA | $ | 317,984 | $ | 176,873 | $ | 49,515 | ||||||||||||||
| Net income (loss) as a % of revenue | 5 | % | 9 | % | (3) | % | ||||||||||||||
| Adjusted EBITDA margin | 14 | % | 12 | % | 6 | % | ||||||||||||||
Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or non-recurring items. We compensate for these limitations by providing specific information regarding the U.S. GAAP items excluded from Adjusted EBITDA. When evaluating our performance, you should consider Adjusted EBITDA in addition to, and not as a substitute for, other financial performance measures, including our net income (loss) and other U.S. GAAP results.
Free Cash Flow is a key performance measure that our management uses to assess our liquidity. Because Free Cash Flow facilitates internal comparisons of our historical liquidity on a more consistent basis, we use this measure for business planning purposes. "Free Cash Flow" is defined as net cash provided by operating activities, less purchases of property, equipment, and intangible assets and investment in website development and internal-use software in investing activities.
The following table reconciles net cash provided by operating activities to Free Cash Flow for the years ended December 31, 2025, 2024, and 2023 (in thousands):
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Net cash provided by operating activities | $ | 300,006 | $ | 251,084 | $ | 73,483 | ||||||||||||||
| Less: purchases of property, equipment, and intangible assets in investing activities | (226,045) | (41,655) | (17,220) | |||||||||||||||||
| Less: investment in website development and internal-use software in investing activities | (16,546) | (11,095) | (9,272) | |||||||||||||||||
| Free Cash Flow | $ | 57,415 | $ | 198,334 | $ | 46,991 | ||||||||||||||
Some of the limitations of Free Cash Flow include (i) Free Cash Flow does not represent our residual cash flow for discretionary expenditures and our non-discretionary commitments, and (ii) Free Cash Flow includes capital expenditures, the benefits of which may be realized in periods subsequent to those in which the expenditures took place. In evaluating Free Cash Flow, you should be aware that in the future we will have cash outflows similar to the adjustments in this presentation. Our presentation of Free Cash Flow should not be construed as an inference that our future results will be unaffected by these cash outflows or any unusual or non-recurring items. When evaluating our performance, you should consider Free Cash Flow in addition to, and not as a substitute for, other financial performance measures, including our net cash provided by operating activities and other U.S. GAAP results.
Basis of Presentation
Currently, we conduct business through one operating segment. The consolidated financial statements include the accounts of our company, our wholly-owned subsidiaries, and variable interest entities ("VIEs") for which we are the primary beneficiary. As of December 31, 2025, the VIEs are the "Affiliated Medical Groups," which are professional corporations or other professional entities owned by licensed physicians and that engage licensed healthcare professionals (physicians, physician assistants, nurse practitioners, and mental health providers; collectively referred to as "Providers" or individually, a "Provider") to provide consultation services. We determined that we are the primary beneficiary of the Affiliated Medical Groups for accounting purposes because we have the ability to direct the activities that most significantly affect these entities' economic performance and have the obligation to absorb the entities' losses. Under the VIE model, we present the results of operations and the financial position of the entities as part of our consolidated financial statements as if the consolidated group were a single economic entity. Additionally, Apostrophe Pharmacy LLC and XeCare, LLC, which are licensed mail order pharmacies providing prescription fulfillment solely to our customers, were VIEs through April 2025 and November 2025, respectively, when, as a result of changes of ownership, they became wholly-owned subsidiaries of our company and were no longer considered VIEs.
Components of Results of Operations
Revenue
We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.
Our consolidated revenue primarily comprises online sales of health and wellness products through our websites and mobile applications, including prescription and non-prescription products, as well as services, primarily consisting of medical consultation services, post-consultation service support, and delivery of laboratory testing results, as applicable. Additionally, revenue is generated through wholesale arrangements.
Cost of revenue
Cost of revenue consists of costs directly attributable to the products shipped and services rendered, including product costs of purchased and manufactured products, packaging materials, shipping costs, labor costs directly related to revenue generating activities including primarily medical consultation services and manufacturing labor, and overhead costs associated with manufactured products. Costs related to free products where there is no expectation of future purchases from a customer and depreciation and amortization on property, equipment, and software (other than related to manufactured products) are considered to be operating expenses and are excluded from cost of revenue.
Gross profit and gross margin
Our gross profit represents total revenue less our total cost of revenue, and our gross margin is our gross profit expressed as a percentage of our total revenue. Our gross profit and gross margin have been and will continue to be affected by a number of factors, including the prices we charge for our products and services, the costs we incur from our vendors for certain components of our cost of revenues, the mix of the various products and services we sell in a period including the launch of new offerings, the volume of fulfillment through internal fulfillment capabilities, and our ability to sell our inventory. While we expect our gross margin to fluctuate from period to period depending on these and other factors, over the long term we expect gross margin to stabilize as we continue to scale our business and increase our ability to negotiate and optimize more favorable costs of revenue.
Marketing expenses
The largest component of our marketing expenses consists of our discretionary customer acquisition costs. Customer acquisition costs, also called paid marketing expense, are the advertising and media costs associated with our efforts to acquire new customers, promote our brands, and build awareness for our products and services. Customer acquisition costs include advertising in digital media, social media, television, radio, out-of-home media, and various other media outlets and exclude content production costs. Marketing expenses also include overhead expenses, including salaries, benefits, taxes, and stock-based compensation for personnel; agency, contractor, and consulting expenses; content production, software, and other marketing operating costs. Marketing is an important driver of growth and we intend to continue to make significant investments in customer acquisition and our marketing organization. Historically, our marketing expenses have increased quarter-over-quarter, though marketing expenses may fluctuate from period to period due to the timing and discretionary nature of these expenses. While marketing expenses may fluctuate as a percentage of revenue, with the additional marketing leverage driven by our newer offerings, along with the maturation of our existing Subscriber base, we expect total marketing expenses as a percentage of revenue to continue to decrease over the long term.
Operations and support expenses
Operations and support expenses include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our supply chain, retail, medical, pharmacy, fulfillment, customer service, and corporate quality functions. These expenses also include operating expenses primarily relating to operations and support functions for our Facilities, warehousing and storage, fulfillment, transaction processing, third-party software and hosting to support those functions, and related depreciation and amortization. We expect operations and support expenses to increase for the foreseeable future as we continue to invest in our fulfillment and operating capabilities and grow our business, resulting in additional operational efficiencies, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
Technology and development expenses
Technology and development expenses include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our engineering, product management, product development, and data science functions. These expenses also include operating expenses primarily relating to technology and development functions for the operation, maintenance, and enhancement of our digital platform, websites, and mobile applications, inclusive of related expenses for third-party software and hosting to support those functions, and related depreciation. Expenses also include investments to develop new health and wellness products and services. We expect technology and development expenses may increase in the foreseeable future as we grow our business and continue to invest in our platform and new offerings and stabilize over the long term, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
General and administrative expenses
General and administrative expenses ("G&A") include the salaries, benefits, taxes, professional services expenses, and stock-based compensation for personnel, consultants, and contractors for our executive, legal, human resources, finance, brand strategy, communications, public and government relations, and other corporate functions. These expenses also include operating expenses primarily relating to general and administrative functions for insurance, third-party software and hosting to support those functions, related depreciation and amortization, and other general corporate costs. We expect G&A to increase for the foreseeable future as we increase headcount with the growth of our business, although it may fluctuate as a percentage of total revenue from period to period due to the timing and amount of these expenses.
Total other income, net
Total other income, net primarily consists of interest income from our cash and cash equivalents and available-for-sale investment accounts. Additionally, total other income, net includes expenses associated with our debt, as well as change in fair value of equity securities and liabilities and non-operating and one-time charges classified outside of operating expenses. Interest income has increased recently as a result of the significant balances in cash and cash equivalents and available-for-sale investments during 2025, although it may fluctuate from period to period based on balances and applicable interest rates. This increase in interest income will be partially offset by interest expense related to the amortization of debt discount and issuance costs on our debt.
Benefit from (provision for) income taxes
The benefit from (provision for) income taxes primarily consists of the impacts of federal and state tax credits and windfall tax benefits, as well as change in valuation allowance, partially offset by state and foreign income taxes. Deferred tax assets are reduced by a valuation allowance to the extent management believes it is not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management makes estimates and judgments about future taxable income based on assumptions that are consistent with our plans and estimates. If and when we conclude that we are more likely than not to utilize some or all of our deferred tax assets, we release some or all of our valuation allowance and our tax provision will decrease in the period in which we make such determination, which will cause a corresponding one-time increase to net income. Any future releases of our current valuation allowance would be immaterial to the consolidated statements of operations.
Results of Operations
Comparisons for the years ended December 31, 2025 and 2024
The following table sets forth our consolidated statement of operations for the years ended December 31, 2025, 2024, and 2023 and the dollar and percentage change between the three periods (dollars in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
| 2025 | Change | % Change | 2024 | Change | % Change | 2023 | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 2,347,637 | $ | 871,123 | 59 | % | $ | 1,476,514 | $ | 604,514 | 69 | % | $ | 872,000 | ||||||||||||||||||||||||||||||
| Cost of revenue | 614,259 | 310,880 | 102 | % | 303,379 | 146,328 | 93 | % | 157,051 | |||||||||||||||||||||||||||||||||||
| Gross profit | 1,733,378 | 560,243 | 48 | % | 1,173,135 | 458,186 | 64 | % | 714,949 | |||||||||||||||||||||||||||||||||||
|
Operating expenses:(1)
|
||||||||||||||||||||||||||||||||||||||||||||
| Marketing | 919,296 | 240,452 | 35 | % | 678,844 | 232,409 | 52 | % | 446,435 | |||||||||||||||||||||||||||||||||||
| Operations and support | 286,444 | 100,642 | 54 | % | 185,802 | 65,945 | 55 | % | 119,857 | |||||||||||||||||||||||||||||||||||
| Technology and development | 149,301 | 70,482 | 89 | % | 78,819 | 30,592 | 63 | % | 48,227 | |||||||||||||||||||||||||||||||||||
| General and administrative | 272,724 | 104,957 | 63 | % | 167,767 | 37,884 | 29 | % | 129,883 | |||||||||||||||||||||||||||||||||||
| Total operating expenses | 1,627,765 | 516,533 | 46 | % | 1,111,232 | 366,830 | 49 | % | 744,402 | |||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 105,613 | 43,710 | 71 | % | 61,903 | 91,356 | * | (29,453) | ||||||||||||||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||||||||||
| Change in fair value of equity securities | 4,437 | 4,437 | 100% | - | - | - | % | - | ||||||||||||||||||||||||||||||||||||
| Change in fair value of liabilities | (9,255) | (9,255) | (100)% | - | 1,075 | (100) | % | (1,075) | ||||||||||||||||||||||||||||||||||||
| Other income, net | 23,129 | 13,321 | 136 | % | 9,808 | 851 | 10 | % | 8,957 | |||||||||||||||||||||||||||||||||||
| Total other income, net | 18,311 | 8,503 | 87 | % | 9,808 | 1,926 | 24 | % | 7,882 | |||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 123,924 | 52,213 | 73 | % | 71,711 | 93,282 | * | (21,571) | ||||||||||||||||||||||||||||||||||||
| Benefit from (provision for) income taxes | 4,441 | (49,886) | (92) | % | 54,327 | 56,302 | * | (1,975) | ||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 128,365 | $ | 2,327 | 2 | % | $ | 126,038 | $ | 149,584 | * | $ | (23,546) | |||||||||||||||||||||||||||||||
(*)Not meaningful
(1)Includes stock-based compensation expense as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Marketing | $ | 12,510 | $ | 9,392 | $ | 5,477 | ||||||||||||||
| Operations and support | 18,910 | 10,205 | 6,815 | |||||||||||||||||
| Technology and development | 19,240 | 12,534 | 7,126 | |||||||||||||||||
| General and administrative | 84,584 | 60,191 | 46,662 | |||||||||||||||||
| Total stock-based compensation expense | $ | 135,244 | $ | 92,322 | $ | 66,080 | ||||||||||||||
The following table sets forth our results of operations as a percentage of our total revenue for the periods presented:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | ||||||||||||||
| Cost of revenue | 26 | % | 21 | % | 18 | % | ||||||||||||||
| Gross profit | 74 | % | 79 | % | 82 | % | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Marketing | 39 | % | 46 | % | 51 | % | ||||||||||||||
| Operations and support | 12 | % | 13 | % | 14 | % | ||||||||||||||
| Technology and development | 7 | % | 5 | % | 6 | % | ||||||||||||||
| General and administrative | 12 | % | 11 | % | 15 | % | ||||||||||||||
| Total operating expenses | 70 | % | 75 | % | 86 | % | ||||||||||||||
| Income (loss) from operations | 4 | % | 4 | % | (4) | % | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Change in fair value of equity securities | - | % | - | % | - | % | ||||||||||||||
| Change in fair value of liabilities | - | % | - | % | - | % | ||||||||||||||
| Other income, net | 1 | % | 1 | % | 1 | % | ||||||||||||||
| Total other income, net | 1 | % | 1 | % | 1 | % | ||||||||||||||
| Income (loss) before income taxes | 5 | % | 5 | % | (3) | % | ||||||||||||||
| Benefit from (provision for) income taxes | - | % | 4 | % | - | % | ||||||||||||||
| Net income (loss) | 5 | % | 9 | % | (3) | % | ||||||||||||||
Revenue
Revenue was $2,347.6 million for the year ended December 31, 2025 compared to $1,476.5 million for the year ended December 31, 2024, an increase of $871.1 million, or 59%. For detailed discussion of this increase, refer to the "Revenue and Key Business Metrics" section.
Cost of revenue and gross profit
Cost of revenue was $614.3 million for the year ended December 31, 2025, compared to $303.4 million for the year ended December 31, 2024, an increase of $310.9 million, or 102%. This increase was primarily due to increased product and packaging costs of approximately 135%, increased shipping costs of 59%, and increased costs associated with medical consultation services of 39%. These increases were primarily due to our weight loss offerings, which have higher product and packaging costs and shipping costs compared to our other offerings, as well as overall increased business activity with the addition of new Subscribers.
Gross profit was $1,733.4 million for the year ended December 31, 2025 compared to $1,173.1 million for the year ended December 31, 2024, an increase of $560.2 million or 48%. Correspondingly, gross margin was 74% for the year ended December 31, 2025 compared to 79% for the year ended December 31, 2024. The decrease in gross margin for the year ended December 31, 2025 was primarily due to our weight loss offerings, which have shorter shipping cadences and increased fulfillment costs, along with the impact of the growth of our international business and new offerings. The decrease was partially offset by lower costs associated with medical consultation services as a percent of revenue as a result of improving Provider efficiency, as well as synergies gained through increased fulfillment volume.
Marketing expenses
Marketing expenses were $919.3 million for the year ended December 31, 2025, compared to $678.8 million for the year ended December 31, 2024, an increase of $240.5 million, or 35%. The most significant component of marketing expenses is customer acquisition costs, which increased to $798.5 million for the year ended December 31, 2025, compared to $594.5 million for the
year ended December 31, 2024, an increase of $204.0 million, or 34%. The increase in customer acquisition costs was primarily a result of management's decision to increase investment in display, search, streaming and linear television (including our Super Bowl marketing campaign in February 2025), affiliate, and radio and podcast marketing, as we continue to identify opportunities to drive new customer growth and which investment further expanded with the addition of newer offerings.
Operations and support
Operations and support expenses were $286.4 million for the year ended December 31, 2025, compared to $185.8 million for the year ended December 31, 2024, an increase of $100.6 million, or 54%. The increase in operations and support was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $40.2 million, an increase in order fulfillment and transaction processing of $26.6 million, an increase in depreciation, amortization, and technology costs of operations and support functions of $9.1 million, an increase in stock-based compensation of $8.7 million and an increase in professional services of $7.2 million.
Technology and development
Technology and development expenses were $149.3 million for the year ended December 31, 2025, compared to $78.8 million for the year ended December 31, 2024, an increase of $70.5 million, or 89%. The increase in technology and development expenses was primarily driven by an increase in depreciation, amortization, and technology costs of $24.0 million, an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $21.4 million, an increase in professional services of $7.7 million, an increase in stock-based compensation of $6.7 million, and an increase in product development costs of $4.6 million.
General and administrative
General and administrative expenses were $272.7 million for the year ended December 31, 2025, compared to $167.8 million for the year ended December 31, 2024, an increase of $105.0 million, or 63%. The increase in general and administrative expenses was primarily driven by an increase in employee compensation (comprising salaries and wages, benefits, taxes, and performance bonuses, and excluding stock-based compensation) of $26.3 million, an increase in stock-based compensation of $24.4 million, an increase in professional services of $20.0 million, an increase in depreciation, amortization, and technology costs relating to general and administrative functions of $17.1 million, an increase in acquisition costs of $5.9 million, and an increase in insurance premiums of $5.4 million.
Total other income, net
Total other income, net was $18.3 million for the year ended December 31, 2025, compared to $9.8 million for the year ended December 31, 2024, an increase of $8.5 million. The increase was driven primarily by interest income of $28.4 million for the year ended December 31, 2025, compared to $10.3 million for the year ended December 31, 2024, as well as a gain from the change in fair value of equity securities of $4.4 million during the year ended December 31, 2025, partially offset by a loss from the change in fair value of liabilities of $9.3 million during the year ended December 31, 2025. The increase in interest income was driven by the significant balances of cash and cash equivalents and investments during 2025, the gain on change in fair value of equity securities was related to unrealized gains on equity securities, and the loss on change in fair value of liabilities was related to changes in the fair value of earn-out liabilities associated with acquisitions.
Benefit from (provision for) income taxes
Benefit from income taxes was $4.4 million for the year ended December 31, 2025, compared to a benefit from income taxes of $54.3 million for the year ended December 31, 2024. The change was mainly due to the change in valuation allowance of $68.0 million in the prior period, primarily due to the full release of the valuation allowance on our domestic deferred tax assets during the year ended December 31, 2024, partially offset by tax activity during that period. The release of the valuation allowance resulted in the recognition of certain deferred tax assets, a decrease to income tax expense, and a corresponding one-time increase to net income for the year ended December 31, 2024.
Liquidity and Capital Resources
As of December 31, 2025, our principal sources of liquidity totaled $928.8 million, consisting of (i) cash and cash equivalents, which are primarily invested in interest-bearing cash accounts and money market funds; (ii) short-term available-for-sale investments, which are invested in government and government agency securities, corporate bonds, and U.S. Treasury bills; and (iii) long-term available-for-sale investments, which are invested in government and government agency securities and corporate bonds.
In February 2025, we acquired via an asset purchase agreement certain manufacturing assets from C S Bio Co. (the "Seller"),a companylocated in the United States, for total cash and Class A common stock consideration payable and issuable in connection with the closing of the transaction of up to approximately $39.1 million.A maximum additional amount of $32.7 millionin cash and Class A common stock consideration is payable to the Seller upon satisfying certain earn-out conditions, which is subject to a continued service condition by the Seller's CEO, as defined in the asset purchase agreement. The cash payments are included within investing activities on the consolidated statements of cash flows.
Additionally, in February 2025, we entered into a Revolving Credit and Guaranty Agreement with certain lenders and JPMorgan Chase Bank, N.A., as administrative and collateral agent, which provides for a three-year senior secured revolving line of credit in an amount up to $175.0 million (the "Credit Facility"). The Credit Facility includes letter of credit and swing line loan sub-limits of $40.0 million and $20.0 million, respectively, and an accordion option, which, if exercised, would allow us to increase the aggregate commitment amount by up to $125.0 million, plus additional amounts if we are able to satisfy a leverage test and certain other conditions. As of December 31, 2025, we had $7.0 million in letters of credit outstanding under the Credit Facility sub-limit. As such, $168.0 million remained available under the Credit Facility as of December 31, 2025. No loans were outstanding under the Credit Facility and we were in compliance with all conditions and covenants thereunder as of December 31, 2025. For additional details regarding the Credit Facility, see Note 13 - Debt to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
In May 2025, we issued $1.0 billion aggregate principal amount of 0% convertible senior notes due 2030 (the "2030 Convertible Notes"), which provided us with aggregate proceeds net of debt discount of $970.0 million. In connection with the issuance of the 2030 Convertible Notes, we separately entered into privately negotiated capped call transactions with certain financial institutions, which resulted in aggregate cash payments of $47.8 million (for additional details see Note 13 - Debt to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). The cash proceeds and cash payments are included within financing activities on the consolidated statements of cash flows.
In July 2025, weacquired all of the outstanding equity of Zava, a digital health platform registered in Germany with operations in the United Kingdom and the European Union, to further expandouroperations in the United Kingdom and to launch in the European Union. The purchase price for accounting purposes was EUR 219.2 million, or $258.0 million, based on the exchange rate on the closing date, including cash paid upfront of EUR 142.2 millionand contingent consideration with an acquisition date fair value of EUR 77.0 million, or $167.3 millionand $90.7 million, respectively, based on the exchange rate on the closing date. The contingent consideration primarily relates to a potential earn-out payable in cash of up to EUR 100.0 million, or $117.7 millionbased on the exchange rate on the closing date, upon achievement of revenue and adjusted EBITDA targets with measurements occurring for each of the 2025, 2026, and 2027 fiscal years, which is recognized as contingent consideration, and which may be paid earlier or later in accordance with certain provisions set forth in the share purchase agreement(for additional details regarding the acquisition see Note 3 - Acquisitions to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). Based on actual results, the earn-out related to the 2025 fiscal year was achieved, and we will make a cash payment in the first half of 2026 of EUR 40.0 million, or $47.0 million based on the exchange rate on December 31, 2025.
In November 2025, we acquired all of the outstanding equity of Medici, a digital health platform registered in Canada. The acquisition established our presence in the Canadian market and furthers ourgoal of expanding ourglobal operations and fulfillment capabilities. The purchase price for accounting purposes was CAD 39.1 million, or $27.8 millionbased on the exchange rate on the closing date, consisting of cash paid upfront of CAD 32.7 millionand cash to be paid at a later date of CAD 6.4 million, or $23.2 millionand $4.6 million, respectively, based on the exchange rate on the closing date. A maximum additional amount of cash consideration of CAD 40.0 million, or $28.4 million based on the exchange rate on the closing date,is payable to the Medici founders ("Sellers") upon satisfying certain earn-out conditions, with measurements occurring for each of the 2026 and 2027 fiscal years. This earn-out payment is subject to a continued service condition, as defined in the business combination agreement, by the Sellers, and is therefore accounted for as post-transaction compensation expense when payout
becomes probable and is reasonably estimable (for additional details regarding the acquisition see Note 3 - Acquisitions to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K).
In January 2026, we completed a merger pursuant to which YourBio Health, Inc. ("YourBio"), a U.S.-based company specializing in capillary whole blood sampling technology, became our wholly-owned subsidiary. We entered into the merger agreement to incorporate YourBio's blood-sampling technology into our technology portfolio. The transaction provided for upfront cash consideration of $150.0 million, not including certain closing adjustments as defined in the merger agreement, plus additional contingent consideration in the form of a potential cash earn-out based on operational metrics measured over a five-year period. Any contingent consideration will be payable in cash within 75days of the end of each applicable earn-out year, in accordance with the merger agreement(for additional details regarding the acquisition see Note 20 - Subsequent Events to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K). As market conditions warrant, we may, from time to time, repurchase our outstanding 2030 Convertible Notes in the open market, in privately negotiated transactions, by tender offer, by exchange transaction, or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity, and other factors and may be commenced or suspended at any time. The amounts involved and total consideration paid may be material to the consolidated financial statements.
In January 2026, we drew $150.0 million on ourCredit Facility to facilitate the YourBio merger discussed above. The amount was repaid in full as of the date of this Annual Report on Form 10-K.
As discussed in the "Recent Developments" section, in February 2026, we entered into a definitive agreement for the Proposed Acquisition of Eucalyptus, which includes aggregate total consideration of up to $1.15 billion, including upfront cash consideration of approximately $240 million, deferred payments totaling an additional amount of approximately $710 million, and a maximum additional amount of approximately $200 millionin earn-out payments, all of which are not including certain closing adjustments as set forth in the Deed. The deferred payments are payable in six quarterly installments through the 18-month anniversary of the closing, and the earn-out payments are payable following the release of our results for each of fiscal years 2026, 2027, 2028, respectively, upon Eucalyptus achieving certain revenue and adjusted EBITDA targets. We have the option to settle approximately 60% of the deferred and earn-out payments in cash or our Class A common stock, at our election.
We believe our existing cash resources, as well as availability under our Revolving Credit Facility, are sufficient to support planned operations for the next 12 months. As a result, management believes that our current and available financial resources are sufficient to continue operating activities for at least one year past the issuance date of the consolidated financial statements.
Our future capital requirements will depend on many factors, including the number of orders we receive, the size of our customer base, the continuing market acceptance of telehealth, and the timing and extent of spend to support the expansion of sales, marketing, development activities, and our Facilities, which may be impacted by inflationary, recessionary, supply chain, or other macroeconomic factors, including the impact of trade actions. We expect to continue to pursue opportunities to expand our manufacturing and internal fulfillment capabilities as well as acquire or invest in complementary businesses (including our Proposed Acquisition of Eucalyptus), services, and technologies, including intellectual property rights. From time to time, we order inventory with sufficient lead time in order to ensure our ability to fulfill customer demand for supply chain, seasonality, or other reasons, which may have an impact on our cash and cash equivalents in a given quarter. We may also use our cash and cash equivalents to repurchase up to $225.0 million of our Class A common stock through November 11, 2028 at management's discretion pursuant to our 2025 Share Repurchase Program. We have based our estimate of our future capital requirements on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise or access additional capital when desired, our business, financial condition, and results of operations would be harmed.
Cash Flows
The following table provides a summary of cash flow data (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net cash provided by operating activities | $ | 300,006 | $ | 251,084 | $ | 73,483 | |||||||||||
| Net cash used in investing activities | (1,024,958) | (19,048) | (12,106) | ||||||||||||||
| Net cash provided by (used in) financing activities | 729,620 | (107,845) | (11,475) | ||||||||||||||
Cash flows from operating activities
Our largest source of operating cash flows is cash collections from our customers. Our primary use of cash from operating activities includes costs of revenue, marketing expenses, and personnel-related expenditures to support the growth of our business.
Net cash provided by operating activities was $300.0 million for the year ended December 31, 2025. Net cash provided by operating activities included non-cash expense related to stock-based compensation of $135.2 million, net income of $128.4 million, depreciation and amortization of $54.5 million, change in fair value of liabilities of $9.3 million, non-cash acquisition-related costs of $5.9 million, and amortization of debt discount and issuance costs of $4.5 million, partially offset by benefit from deferred taxes of $13.0 million, change in fair value of equity securities of $4.4 million, and a net accretion on securities of $2.0 million. In addition, a net cash outflow totaling $29.2 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in prepaid expenses of $51.9 million, a decrease in accrued liabilities of $43.1 million, and an increase in inventory of $13.7 million. This outflow was partially offset by an increase in deferred revenue of $51.6 million and an increase in accounts payable of $30.3 million.
Net cash provided by operating activities was $251.1 million for the year ended December 31, 2024. Net cash provided by operating activities included net income of $126.0 million, non-cash expense related to stock-based compensation of $92.3 million, and depreciation and amortization of $17.1 million, partially offset by benefit from deferred taxes of $61.6 million and a net accretion on securities of $4.4 million. In addition, a net cash inflow totaling $78.6 million was attributable to changes in operating assets and liabilities, primarily as a result of an increase in deferred revenue of $67.6 million and an increase in accounts payable and accrued liabilities of $67.5 million. This inflow was partially offset by an increase in inventory of $41.6 million, an increase in prepaid expenses of $9.5 million, and a decrease in earn-out payable of $2.8 million.
Cash flows from investing activities
Cash flows from investing activities primarily relate to our treasury operations of investing in available-for-sale investments and acquisitions, as well as purchases of property, equipment, and intangible assets and investment in website development and internal-use software. Our purchases of property, equipment, and intangible assets have increased in recent quarters as we scale our internal fulfillment capabilities to supply the increasing demand for our personalized offerings.
Net cash used in investing activities for the year ended December 31, 2025 was $1,025.0 million, which was primarily due to net investment cash outflows related to available for sale securities of $617.1 million, $226.0 million in purchases of property, equipment, and intangible assets, including the cash payments made in connection with the C S Bio Co. asset acquisition, $145.2 million for the acquisition of businesses, net of cash acquired, primarily related to the Zava and Medici acquisitions, $20.0 million in a purchase of equity securities. and investments of $16.5 million in website development and internal-use software.
Net cash used in investing activities for the year ended December 31, 2024 was $19.0 million, which was primarily due to $41.7 million in purchases of property, equipment, and intangible assets, $15.4 million for the acquisition of MedisourceRx, and investments of $11.1 million in website development and internal-use software. This cash outflow was partially offset by net investment cash inflows related to available for sale securities of $49.1 million.
Cash flows from financing activities
Net cash provided by financing activities for the year ended December 31, 2025 was $729.6 million, which was primarily due to proceeds from issuance of convertible senior notes, net of debt discount of $970.0 million, proceeds from exercise of vested stock options of $11.0 million, and proceeds from employee stock purchase plan of $6.4 million. This cash inflow was partially offset by payments for taxes related to net share settlement of equity awards of $116.7 million, repurchases of our Class A common stock of $90.0 million, purchases of capped calls related to convertible senior notes of $47.8 million, and payments for debt issuance costs of $3.4 million.
Net cash used in financing activities for the year ended December 31, 2024 was $107.8 million, which was primarily due to repurchases of our Class A common stock of $83.0 million, payments for taxes related to net share settlement of equity awards of $52.5 million, and payments for acquisition-related earn-out consideration of $3.2 million. This cash outflow was partially offset by proceeds from the exercise of stock options of $26.7 million and proceeds from employee stock purchase plan of $3.9 million.
Contractual Obligations and Commitments
Our contractual obligations and commitments include operating leases (including one executed but not yet commenced as of period end), the fair value of earn-out payable, earn-out liabilities, and other contingent consideration related to acquisitions, and non-cancelable purchase obligations primarily related to cloud-based software contracts used in operations. Total contractual obligations and commitments as of December 31, 2025 were $356.2 million, of which $77.9 million was payable within 12 months.
Critical Accounting Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in our financial statements and accompanying notes. Management believes that the estimates, judgments, and assumptions upon which it relies are reasonable based upon information available to it at the time that these estimates, judgments, and assumptions were made. Actual results may differ from management's estimates. To the extent that there are material differences between these estimates and actual results, our consolidated financial statements will be affected.
Our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. These are the policies that we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
Income Taxes
We are required to assess whether it is more likely than not that we will realize our deferred tax assets. Realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain. If we believe that they are not more likely than not to be fully realizable before the expiration dates applicable to such assets, then to the extent we believe that recovery is not more likely than not, we must establish a valuation allowance.
We evaluate our deferred tax assets for realizability considering both positive and negative evidence, including our historical financial performance, projections of future taxable income, future reversals of existing taxable temporary differences, tax planning strategies, and any carryback availability. In evaluating the need for a valuation allowance, we estimate future taxable income based on management's approved business plans. This process involves significant management judgment about assumptions that are subject to change from period to period based on changes in tax laws or variances between future projected operating performance and actual results. Changes in the net deferred tax assets, less offsetting valuation allowance, in a period are recorded through the income tax provision and could have a material impact on the consolidated statements of operations and comprehensive income (loss).
As of December 31, 2025, with the exception of certain attributes, we believe it is more likely than not that we will realize our domestic and foreign deferred tax assets.
Business combinations
Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions, and competition. In connection with determination of fair values, we may engage a third-party valuation specialist to assist with the valuation of intangible and certain tangible assets acquired and certain assumed obligations.
During the year ended December 31, 2025, our largest acquisition was Zava. The most significant estimates for the acquisition accounting related to the valuation of the identified intangible assets, with a combined acquisition date fair value of $143.8 million determined using the multi-period excess earnings method, and the valuation of the contingent consideration, with an acquisition date fair value of $90.7 million using a Monte Carlo simulation.
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