Hims & Hers Health, Inc.HIMS
Hims & Hers Health, Inc. Income Taxes Disclosure
Income Tax
For financial reporting purposes, income (loss) before income taxes includes the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Domestic | $ | 134,183 | $ | 71,111 | $ | (16,749) | ||||||||||||||
| Foreign | (10,259) | 600 | (4,822) | |||||||||||||||||
| Income (loss) before income taxes | $ | 123,924 | $ | 71,711 | $ | (21,571) | ||||||||||||||
The (benefit) provision for income taxes consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | (34) | $ | 1,639 | $ | 532 | ||||||||||||||
| State | 2,926 | 5,683 | 1,456 | |||||||||||||||||
| Foreign | 5,628 | — | — | |||||||||||||||||
| Total current provision | 8,520 | 7,322 | 1,988 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | (4,586) | (43,328) | 12 | |||||||||||||||||
| State | (2,162) | (18,321) | (25) | |||||||||||||||||
| Foreign | (6,213) | — | — | |||||||||||||||||
| Total deferred benefit | (12,961) | (61,649) | (13) | |||||||||||||||||
| Total (benefit) provision for income taxes | $ | (4,441) | $ | (54,327) | $ | 1,975 | ||||||||||||||
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory United States federal income tax rate to income (loss) before income taxes after the adoption of ASU 2023-09 is as follows (in thousands, except for percentages):
| Year Ended December 31, 2025 | ||||||||||||||
| Amount | Percent | |||||||||||||
| United States federal statutory tax rate | $ | 26,024 | 21.0 | % | ||||||||||
State and local income taxes, net of federal income tax effect(1) | (978) | (0.8) | % | |||||||||||
| Foreign tax effects | ||||||||||||||
| United Kingdom | ||||||||||||||
| Changes in valuation allowance | (2,625) | (2.1) | % | |||||||||||
| Other | (85) | (0.1) | % | |||||||||||
| Germany | ||||||||||||||
| Non-deductible loss on change in fair value of liabilities | 1,940 | 1.6 | % | |||||||||||
| Other | 1,793 | 1.4 | % | |||||||||||
| Other foreign jurisdictions | 1,009 | 0.8 | % | |||||||||||
| Effect of cross-border tax laws | ||||||||||||||
| Global intangible low-taxed income | 835 | 0.7 | % | |||||||||||
| Effect of foreign branch taxes | (384) | (0.3) | % | |||||||||||
| Tax credits | ||||||||||||||
| Research and development tax credits | (19,522) | (15.8) | % | |||||||||||
| Foreign tax credits | (3,868) | (3.1) | % | |||||||||||
| Changes in valuation allowance | 3,868 | 3.1 | % | |||||||||||
| Nontaxable or nondeductible items | ||||||||||||||
| Excess tax benefits from share-based payment awards | (70,834) | (57.1) | % | |||||||||||
| Non-deductible officers' compensation | 49,599 | 40.0 | % | |||||||||||
| Non-deductible transaction costs | 1,012 | 0.8 | % | |||||||||||
| Other | 901 | 0.7 | % | |||||||||||
| Changes in unrecognized tax benefits | 6,541 | 5.3 | % | |||||||||||
| Other adjustments | 333 | 0.3 | % | |||||||||||
| Effective tax rate | $ | (4,441) | (3.6) | % | ||||||||||
______________
(1)State taxes in Arizona, California, and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
A reconciliation of the (benefit) provision for income taxes to the amount computed by applying the 21% statutory United States federal income tax rate to income (loss) before income taxes for years prior to the adoption of ASU 2023-09 is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | ||||||||||||||||
| Tax provision (benefit) at federal statutory rate | $ | 15,059 | $ | (4,530) | |||||||||||||
| State taxes, net of federal benefits | 2,700 | 1,636 | |||||||||||||||
| Non-deductible officers' compensation | 26,632 | 6,386 | |||||||||||||||
| Non-deductible expenses | 373 | 714 | |||||||||||||||
| Warrants and earn-outs | (1,141) | 226 | |||||||||||||||
Research and development credits | (4,801) | (5,398) | |||||||||||||||
| Stock-based compensation | (28,361) | 1,747 | |||||||||||||||
| Change in valuation allowance | (65,021) | 1,330 | |||||||||||||||
| Other, net | 233 | (136) | |||||||||||||||
| Total | $ | (54,327) | $ | 1,975 | |||||||||||||
The components of deferred tax assets and liabilities are as follows (in thousands):
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net operating loss carryforwards | $ | 19,263 | $ | 21,032 | ||||||||||
| Operating lease liabilities | 37,135 | 2,827 | ||||||||||||
| Capitalized research and development | 25,683 | 35,120 | ||||||||||||
| Research and other credits | 20,248 | 4,812 | ||||||||||||
| Interest original issue discount | 10,703 | — | ||||||||||||
| Other intangibles assets | 8,986 | 276 | ||||||||||||
| Stock-based compensation | 7,376 | 2,311 | ||||||||||||
| Inventory | 5,843 | 5,874 | ||||||||||||
| Accrued expenses and reserves | 4,279 | 3,778 | ||||||||||||
| Foreign tax credit carryforward | 3,868 | — | ||||||||||||
| Deferred revenue | 412 | 186 | ||||||||||||
| Other deferred tax assets | 2,706 | 865 | ||||||||||||
| Total gross deferred tax assets | 146,502 | 77,081 | ||||||||||||
| Less valuation allowance | (3,868) | (2,493) | ||||||||||||
| Total deferred tax assets | 142,634 | 74,588 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Other intangible assets | (37,520) | (3,771) | ||||||||||||
| Operating lease right-of-use assets | (34,414) | (2,711) | ||||||||||||
| Fixed assets | (11,167) | (4,560) | ||||||||||||
| Prepaid expenses | (2,494) | (793) | ||||||||||||
| Unrealized gain/loss | (1,134) | — | ||||||||||||
Deferred state income tax | — | — | ||||||||||||
| Other deferred tax liabilities | (2,054) | (1,150) | ||||||||||||
| Total deferred tax liabilities | (88,783) | (12,985) | ||||||||||||
| Net deferred tax assets | $ | 53,851 | $ | 61,603 | ||||||||||
The Company has revised the presentation of its deferred tax assets and liabilities to present the federal benefit of state tax amounts netted with the related deferred position. In the prior year the federal benefit of state tax amounts was presented as a separate item. The prior year amounts have been reclassified to confirm with the current year presentation.
The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence to ascertain whether it is more likely than not that deferred tax assets will be realized. Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. Prior to 2024, the Company concluded that a valuation allowance was required against its deferred tax assets. The Company considers all available positive and negative evidence in its assessment of the recoverability of its deferred tax assets each reporting period. During 2024, the Company determined that a valuation allowance against its domestic deferred tax assets was no longer required, primarily due to sustained tax profitability (pre-tax earnings or loss adjusted by permanent book to tax differences), which is objective and verifiable evidence, as well as anticipated future earnings. With the exception of certain foreign tax credits generated during the year, the Company continues to believe it is more likely than not that it will realize its domestic deferred tax assets. Additionally, in 2025, the Company released its valuation allowance against its United Kingdom deferred tax balances, and there are no valuation allowances offsetting United Kingdom deferred tax assets as of December 31, 2025. The Company’s judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in the level of tax profitability that the Company achieves and changes in tax laws or regulations. Additionally, income tax credit estimates could change in the near future due to changes in economic circumstances resulting in the pursuit of additional credits that currently would not be economically beneficial to pursue. The valuation allowance increased by $1.4 million and decreased by $68.0 million during the years ended December 31, 2025 and 2024, respectively. The decrease during the year ended December 31, 2024 was primarily related to the full release of the valuation
allowance on the Company’s domestic deferred tax assets, a majority of which was recognized during the third quarter of 2024, partially offset by tax activity for that year.
As of December 31, 2025, the Company has $26.3 million, $83.7 million, and $31.4 million, respectively, in federal, state, and foreign loss carryforwards (not tax effected), of which $26.1 million, $1.0 million, and $30.8 million, respectively, in federal, state, and foreign loss carryforwards do not expire. The remaining state loss carryforwards begin to expire in 2030. As of December 31, 2025, the Company had $26.1 million of federal tax credit carryforwards, prior to the netting of uncertain tax positions, that will begin to expire in 2043, and $7.2 million of state tax credit carryforwards, prior to the netting of uncertain tax positions, of which $6.4 million does not expire. The remaining state tax credit carryforwards will begin to expire in 2034.
Internal Revenue Code Sections 382 and 383 place a limitation on the amount of taxable income that can be offset by carryforward tax attributes, such as net operating losses or tax credits, after a change in control. Generally, after a change in control, a loss corporation cannot deduct carryforward tax attributes in excess of the limitation prescribed by Sections 382 and 383. Therefore, certain of the Company’s carryforward tax attributes are subject to an annual limitation regarding their utilization against taxable income in future periods. As a result of issuances of different classes of preferred stock to investors in 2017 and 2018, the Company triggered “ownership change(s)” as defined in Section 382 and related provisions. Some of the Company’s net operating losses are limited by these ownership changes, but the annual limitation does not have a significant impact on the consolidated financial statements. Subsequent ownership changes may subject the Company to annual limitations of its net operating losses. Such annual limitations could result in the expiration of the net operating loss and credit carryforwards before utilization.
Changes in unrecognized tax benefits for the years ended December 31, 2025, 2024, and 2023, excluding interest and penalties, were as follows (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at the beginning of the year | $ | 6,011 | $ | 2,313 | $ | — | ||||||||||||||
| Increases in balances related to prior year tax positions | 7,157 | 2,042 | 1,357 | |||||||||||||||||
| Increases in balances related to current year tax positions | 5,338 | 1,656 | 956 | |||||||||||||||||
| Balance at the end of the year | $ | 18,506 | $ | 6,011 | $ | 2,313 | ||||||||||||||
Any adjustments to the Company’s uncertain tax positions would result in an adjustment to its deferred tax asset carryforwards or its effective tax rate. During the years ended December 31, 2025, 2024, and 2023, no interest or penalties were required to be recognized relating to unrecognized tax benefits.
The Company files income tax returns in the United States, the United Kingdom, Germany, the Republic of Ireland, Canada, and various state and local jurisdictions. Due to the net operating loss carryforward in the United States, the statute of limitations is open for 2018 and forward. In the United Kingdom, the statute of limitations is open for fiscal year 2024 and forward. There is no jurisdiction currently under examination by any tax authorities.
As of December 31, 2025, the Company has accumulated undistributed earnings generated by its foreign subsidiaries. The Company intends to indefinitely reinvest these earnings, as well as future earnings from its foreign subsidiaries to fund its international operations. In addition, the Company expects future United States cash generation will be sufficient to meet future United States cash needs.
The amounts of cash income taxes paid by the Company, net of refunds received, consisted of the following (in thousands):
| Year Ended December 31, 2025 | ||||||||
Federal | $ | 15,428 | ||||||
State | 7,004 | |||||||
Foreign | 730 | |||||||
Total | $ | 23,162 | ||||||
During the year ended December 31, 2025, no individual jurisdiction exceeded 5% of the total cash income taxes paid.
The amount of cash income taxes paid by the Company, net of refunds received, during the years ended December 31, 2024 and 2023 was $7.9 million and $1.1 million, respectively.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.