Hims & Hers buys Australian digital health firm for $1.15bn

Facing the legal consequences of its aborted entry into the oral GLP-1 category in the US, telehealth company Hims & Hers has turned its attention to international matters with an agreement to buy Australian rival Eucalyptus Health.

The agreement – which has been valued at up to $1.15 billion – is the strongest signal yet of Hims & Hers' aspirations to grow into a global health player, with the addition of Eucalyptus giving it a strong presence in Australia, expanding its business in Europe, and providing a beachhead in other markets, including Japan and Canada.

Eucalyptus has several consumer brands, notably weight-loss platform Juniper, which operates in Australia, the UK, Germany, and Japan, and men's health services Pilot and Compound.

"We've built a strong business in the US and established ourselves as a market leader," said Hims & Hers chief executive, Andrew Dudum. "That momentum gives me confidence that our next step is expanding our brand abroad."

News of the deal – which includes an upfront payment of $240 million – will be a welcome departure for Hims & Hers from the current media attention to its ill-fated decision to launch a copycat version of Novo Nordisk's just-launched oral GLP-1 agonist Wegovy (semaglutide) in the US, only to backtrack a few days later.

Since then, Hims & Hers has been sued by Novo Nordisk, which is seeking damages for infringing its intellectual property.

However, potentially far more serious for Hims & Hers, as well as other companies that have built businesses based on the launch of compounded versions of in-patent medicines, is that the move seems to have galvanised the FDA into action over the controversial compounding pharmacy issue.

In a statement issued earlier this month, the regulator said it will take steps to "combat misleading direct-to-consumer advertising and marketing" of compounded medicines, emphasising that the companies offering them "cannot claim that non-FDA-approved compounded products are generic versions or the same as drugs approved by FDA."

Given the threat to Hims & Hers' GLP-1-based weight-loss business, the Eucalyptus deal will give the company an opportunity to pursue other growth avenues. It comes after the acquisitions last year of UK digital health player Zava and Canadian telehealth company Livewell.

Hims & Hers said buying Eucalyptus will add around 775,000 customers to its current base of around 2.5 billion, and bolt on a business that is making annualised revenues of around $450 million.

"By joining Hims & Hers, we will help more people globally believe in the future of healthcare: simple, high-quality, personal, and designed to help prevent disease, instead of merely treating it," said Tim Doyle, co-founder and CEO of Eucalyptus.

"We've spent seven years helping customers around the world find the care that fits them, and we believe today's news will be part of accelerating the movement towards affordable healthcare for everyone that feels like a luxury."

The bulk of the $1.15 billion price tag for the Australian company is tied to a combination of guaranteed payments due in the 18 months following closing, which is expected in the middle of the year, as well as earnout payments tied to the financial targets through early 2029.