The A$1.6bn Eucalyptus-HIMS Exit Deep Dive

This article was originally published on Karen Chan’s Market Musings newsletter on LinkedIn and is republished here with permission.

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A Landmark Moment for Australian Venture

The Hims & Hers Health, Inc. (NYSE: HIMS) acquisition of Eucalyptus Health for up to A$1.6 billion (US$1.15B) is, by any measure, a landmark moment for the Australian startup ecosystem. A company founded in 2019, backed by Blackbird, Airtree and BOND, has delivered what is likely the largest ESOP payout in Australian startup history, with hundreds of employees sharing over $300 million (source: AFR).

In an ecosystem obsessed with SaaS and AI hype, the largest private trade sale of a VC-backed Australian startup is a direct-to-consumer healthcare company selling weight loss drugs and hair loss treatments. Not enterprise software. Not a foundation model. Not deeptech with a massive technical moat. It’s a telehealth business with multiple brands, including ones called Pilot and Juniper. Sometimes the unsexy categories produce the biggest outcomes where execution sets a company apart from the competition.

On the numbers, the deal values Eucalyptus at roughly 2.6x its reported US$450M+ annual revenue run rate. For a company delivering triple-digit year-over-year ARR growth across five markets but still burning cash, this is a pragmatic multiple rather than a frothy one. Note that this is run rate based so the multiple is certainly higher on a LTM revenue basis (A$121m FY24 and doubling to A$248m FY25). There is no meaningful EBITDA multiple given the company remains loss-making. The valuation tells you this was priced on the growth trajectory and the strategic premium of being the only scaled international DTC health platform available, not on current profitability.

Having gone through the full 8-K filing and the Securities Sale Deed lodged with the SEC, the deal structure tells a more nuanced story than the headline suggests.

The Headline Is Real. The Certainty Isn’t.

Of the US$1.15B total consideration, only around US$240M is guaranteed cash at close — roughly 21% of the deal. The remaining US$910M is split between deferred (but guaranteed in dollar terms) payments drip-fed over 18 months and performance-based earnouts stretching through to FY2028, with a backstop date as late as June 2031. On the face of it, the liquidity here is real — hard cash and liquid stock with most of the payments guaranteed. But the form of that payment is where the risk lives.

Not All Sellers Are Created Equal

The deal creates a clear two-tier structure. Founders and key management (“Key Employee Sellers”) receive 40% of their allocation upfront in cash, with 60% sitting in earnout tied to revenue and adjusted EBITDA targets for each of FY25, FY26 and FY28. The upfront gives this group a clear win and reward for efforts to date and potentially a re-write of the waterfall where typically investors (those higher in the preference stack) are paid out first. However, with their remaining 60% backend loaded, this provides the buyer with management team alignment to make the combination a success. They also have the riskier end of the trade as they need to deliver on the integration and international growth under new ownership.

Financial investors and ESOP holders (“Other Sellers”) receive 20% of their non-earnout share upfront (effectively around 18% of their total entitlement on day one), with the rest paid in six tranches over 18 months. This group also carries some performance risk (10%) but the bulk of their payments is on a fixed schedule, giving them a more de-risked position.

In addition, Eucalyptus employees who transition over will receive US$50 million in RSUs immediately at close, plus another US$50 million granted over four years at $12.5 million annually (US$100 million in total equity compensation that sits outside the US$1.15 billion enterprise value). This provides them with further incentive.

The Equity Optionality Favours the Buyer

HIMS has sole discretion to settle up to 60% of deferred and earnout payments in HIMS stock instead of cash. The pricing is based on a 10-day VWAP, a short window vulnerable to volatility where there is no floor price or collar mechanism. With HIMS stock down over 50% year-to-date, this is real risk.

Another detail that people miss: those shares appear to be issued under a private placement exemption, meaning they are restricted securities. Sellers cannot immediately trade them on the open market despite HIMS being NYSE-listed. They are reliant on either a 6-month Rule 144 holding period (during which they bear full price risk) or HIMS filing a resale registration statement to unlock liquidity. The Other Sellers (VCs and financial investors) would be free to trade with the holding period more of an inconvenience, but Key Employee Sellers would become HIMS insiders and face trading windows and blackout periods.

Capital Structure Considerations

This is where the picture gets more complex than most coverage has acknowledged. HIMS has every incentive to exercise its equity option for the deferred payments (US$710m due over 18 months) to preserve cash as it also has potentially c.US$1 billion zero-coupon convertible note maturing May 2030. These notes were issued in May 2025 when the stock was at its peak. Investor demand was so strong the US$450m convertible offering was upsized to US$870m and purchasers exercised their additional option in full to bring it to US$1 billion. The strike price is at US$70.67 with a capped ceiling at US$89.95 which at the time of the issuance appeared within striking distance. Currently the notes are out-of-the-money and if by maturity the stock is still out-of-the-money, the notes become debt with a bullet payment due.

2030 is still some way out but HIMS could face a direct trade-off between paying sellers in cash and preserving liquidity for a potential debt wall.

If HIMS chooses to pay its guaranteed payments and earnouts in equity and the stock continues to slide, sellers are left holding a depreciating position in a company with a potential looming refinancing problem. HIMS would also face significant dilution. This is also not to say that there is no share price recovery — being a listed company also allows HIMS to raise additional cash to service the potential debt. Furthermore this M&A gives it a more attractive and global equity story and diversification.

Eucalyptus’s Advisors Earned Their Fees

Several provisions in the definitive agreement stand out as genuine wins:

• Earnout catch-up mechanism: Allows underperformance in Year 1 to be retroactively recalculated if targets are exceeded in Years 2 or 3
• Expanded earnout group: The Earnout Group includes HIMS’ pre-existing UK (Zava) and Canadian businesses (Livewell), inflating the base beyond Eucalyptus’s own organic performance
• W&I insurance as sole recourse: For warranty claims, giving VCs a clean exit
• MAC carve-outs: Explicitly carves out existing TGA investigations, protecting against a known regulatory risk being used to walk away from the deal
• Working capital facility: HIMS and Eucalyptus are also negotiating a $30 million revolving debt facility to cover Eucalyptus’s working capital needs before the deal closes

The ASX Didn’t Lose. Eucalyptus Chose.

Some commentary and media reports have framed this deal as another Australian success story lost to the U.S. That misreads what actually happened. Eucalyptus was fresh off a mooted $1.37B valuation with multiple paths available to it. It could have pursued an ASX IPO. It could have stayed private and kept compounding. Instead, the founders and the board assessed that the highest-value path was to combine with the global leader in their category.

It also just so happened that HIMS needed them right now, facing a regulatory crackdown on its U.S. compounded GLP-1 business, a lawsuit from Novo Nordisk and a newly disclosed SEC investigation. Eucalyptus itself is not immune to regulatory scrutiny so it could be said that combining the two companies would allow both to navigate these challenges together. The HIMS stock would have been trading around $40-60 as discussions heated up, giving them good scrip capital to work with (at 3x-4x the levels when the final deal was ultimately announced). Eucalyptus was the only asset globally that could give it instant scale across multiple international markets with a proven DTC healthcare model. That kind of buyer urgency creates leverage.

This was a strategic decision to pair Eucalyptus’s international footprint and local regulatory expertise (even as a still cash-burning business) with HIMS’ scale, brand, distribution infrastructure and public market capital. An IPO gives you capital. This deal gives you a global operating partner familiar with the regulatory risk profile, immediate access to 2.5 million subscribers, and shared infrastructure across five markets.

Eucalyptus was likely running a dual-track process from mid-2025. They were raising from existing investors (Blackbird putting in SAFE capital from September), while simultaneously talking to HIMS (confidentiality agreement signed October) per the 8-K. The fundraise was announced publicly in late November, but by then HIMS was already deep in due diligence. The real question the ASX should be asking is what it would take to make listing locally the more compelling option for founders with that level of ambition.

Final Takeaway

This is a genuine win for Australian technology and venture. The ecosystem needed a billion-dollar exit that paid real money to real people: founders, employees, and local investors. Eucalyptus’s focus on ESOP plans and ensuring employees understood their equity from day one will likely create a ripple effect as this capital gets recycled back into the economy with new startups and angel cheques.

But the distance between the headline and the cash actually hitting bank accounts is longer, riskier, and more contingent than most coverage has acknowledged. Post-deal execution is still key — which with the current players on the team, you can bet they have the ability to course through the downs and carry it up. Overall, what a win for the unloved DTC sector.

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About the Companies

Eucalyptus Health is an Australian digital health company founded in 2019 by Tim Doyle, Charlie Gearside, Benny Kleist, and Alexey Mitko. It operates a vertically integrated telehealth platform: online health assessment, clinician consultation, e-prescription, medication delivery via partner pharmacies, and ongoing care. The model is essentially subscription-based — customers buy into treatment programs, not one-off prescriptions. Eucalyptus runs five brands targeting specific health verticals: Pilot (men’s health), Juniper (women’s weight loss and menopause — the primary growth engine), Kin (reproductive health), Software (prescription skincare), and Compound (men’s preventative health). The company also acquired the digital assets of Jenny Craig Australia in June 2023. As of FY2024, reported revenue was A$120.9 million (60% from international markets), doubling to approximately A$248 million by late 2025. Funding rounds include A$8M Series A (May 2020), A$30M Series B (July 2021), A$60M Series C (January 2022), and was targeting a A$190M raise at a A$1.37B valuation in late 2025 backed by BOND, Blackbird, Airtree, Marbruck, and World Innovation Lab.

Hims & Hers Health, Inc. (NYSE: HIMS) is a San Francisco-based direct-to-consumer telehealth platform founded in 2017 by Andrew Dudum. It provides prescription medications and wellness products across sexual health, hair loss, weight loss, skincare, mental health, and primary care. The company went public in January 2021 via SPAC merger at a US$1.6B valuation. Full year 2025 revenue reached $2.35 billion (up 59% YoY) with over 2.5 million subscribers. HIMS has been expanding internationally through acquisitions: Zava (European telehealth), Livewell (Canadian digital health), and YourBio Health (capillary blood-sampling technology). 2026 revenue guidance is $2.7-2.9 billion.