Whereas the headline determine of a A$1.6 billion sale worth for Eucalyptus was a trigger for celebration, seen by many an essential payday for an Australian startup sector the place liquidity is a matter, the superb print of the deal reveals there’s a protracted strategy to go earlier than the money trickles right down to buyers and shareholding workers.
The online healthcare startup, founded in 2019, had been seeking to increase new funding at a valuation that will have minted it as a unicorn when the US$1.15 billion cope with NYSE-listed rival Hims and Hers dropped.
The acquisition worth is round 10x of the US$111 million in venvture funding the startup raised over 4 years. Eucalyptus final raised $50m at a $520m valuation in April 2023.
It’s a daring marriage by each side, banking that the entire will probably be higher than the sum of their rival elements.
Shares in San Francisco-based Hims & Hers Well being have tanked 64% over the past 12 months, together with a 55%+ slide within the first two months of 2026 – an 8% fall within the days for the reason that deal was introduced.
The well being and wellness platform is not any Robinson Crusoe in falling out of favour with buyers – Nasdaq-listed office software program agency Atlassian’s shares have plunged greater than 70% in 12 months and greater than 50% in 2026 as software program corporations usually battle amid the AI transformation.
However Hims & Hers, based in late 2017, earlier than itemizing on the NYSE in January 2021 through a particular goal acquisition firm (SPAC), isn’t a software program firm per se. Like Eucalyptus, it sells on-line consultations and coverings for well being points corresponding to weight reduction, sexual dysfunction, hair loss, skincare and psychological well being.
Authorized and regulatory troubles
A part of the issue is a bitter battle with Novo Nordisk, producer of GLP-1 weight reduction medicine Ozempic and Wegovy.
Hims & Hers signed a cope with the Danish drugmaker in April 2025 to promote Wegovy. It lasted about three months earlier than Novo Nordisk ripped it up, claiming their buyer was promoting Wegovy copies illegally, in addition to objecting to the advertising techniques of the US startup.
The dispute escalated final month when Novo Nordisk launched US legal action, suing Hims & Hers for damages over promoting compounded variations of its medicine, claiming they infringe on the Danish firm’s patents, in addition to asking the court docket to ban their sale.
It’s a pincer motion, for the reason that US Drug and Food Administration is also gunning for Hims & Hers over its advertising and compounded medicine, asserting its personal investigation and crackdown a couple of weeks in the past.
By the way, Eucalyptus has some inkling of what’s happening having pursued a similar path a few years back earlier than compounding weight reduction medicine have been banned by the federal authorities in early 2024, amid objections from the startup.
In the meantime, Hims & Hers (NYSE: HIMS) shares now sit round US$14.50, down from a 12-month excessive of $70.43, for a market cap simply above US$3.3 billion.
Which means Eucalyptus is now price round a 3rd of acquirer’s present market cap.
However none of this battle – an existential menace to Hims & Hers – prevented breathy reporting by some information websites of how 100 workers within the Eucalyptus ESOP will probably be millionaires, whereas VCs “stand to make a motza”, particularly Blackbird’s 2018 fund delivering a 34.5x return “as soon as paid out”.
That’s an essential qualifier within the reporting, as a result of there are plenty of devils in the details of this M&A deal.
Excessive bars to clear
A whole lot of work to be performed by the Eucalyptus workforce to attain the overall acquisition worth.
Blackbird owns round 1 / 4 of Sydney startup, having invested seven instances. So theoretically, they’re sitting on one thing circa a A$400m return.
Companion Nick Crocker instructed Capital Temporary that: “the transaction will see greater than 2x our total 2018 fund returned over the approaching years”.
However the A$1.6bn headline determine remains to be a good distance from the truth for a lot of shareholders. Persistence can also be required, since it will likely be FY2029 earlier than the overall acquisition worth is finalised.
First up, if and when it goes by in mid-2026 – Eucalyptus operates in a number of areas throughout Europe, Asia and North America, so the deal is probably going topic to multi-jurisdictional regulatory clearances – Hims & Hers is making an preliminary 40% downpayment in money: US$240m (c. A$340m), cut up between workers and buyers, the previous getting a bit over half that determine, US$133m.
One other US$710m is paid out to non-staff, post-close, over 18 months.
Solely key worker sellers rating the 40% of their entitlement upfront – the remaining 60% is predicated on earnouts, price as much as US$200m, and tied to income/EBITDA targets over three years, spanning 2026-28.
Which means workers are in golden handcuffs till then if they need the upside. There’s US$50m in HIMS shares on the desk underneath the corporate’s 2020 Fairness Incentive Plan – $12.5m a 12 months over 4 years – “to sure workers” who be part of the US firm from Eucalyptus.
Sure it’s a sensible retention mechanism to maintain key workers to assist guarantee the continuing success of Eucalyptus, however stroll away earlier than then and people workers probably forfeit a big slice of their payout.
What buyers get
Buyers initially rating round 18 cents within the $1 – 20% of 90% of their entitlement upfront when the deal closes. Then they’re paid the remaining 70% six instances, each three months, over the subsequent 18 months.
So by across the finish of 2027, buyers in funds corresponding to Blackbird, Airtree, Woolworths VC fund W23, OneVentures, Athletic Ventures, and Mary Meeker’s BOND Capital ought to have a fairly clear concept of how they’ve performed, together with the ultimate 10% of investor returns tied to the efficiency targets.
On high of all that, then the US$1.15 billion sale worth can also be topic to web debt and dealing capital changes.
Its final filed accounts, in FY2024, Eucalyptus had income of $120.9 million, a rise of $41m on the earlier 12 months, whereas slicing its after-tax losses by greater than half to $15.2m.
Given the enterprise was nonetheless most certainly working at a loss and burning money – therefore increase plans ( it was rumoured to have secured $190m in VC funding at a A$1.37bn valuation final November) – the changes might additionally scale back the deal measurement.
It will get higher, as a result of Hims & Hers has, at “its sole discretion”, is ready pay as much as 60% of deferred and earnout funds in HIMS inventory relatively than money. The value will probably be set by a VWAP at time of issuance, not when the deal was reduce in mid February, so if issues go badly within the courts and HIMS inventory drops additional between now and cost, Eucalyptus stockholders are shortchanged on the deal, whereas additionally being uncovered to HIMS fairness danger with out a hedge.
M&A is a difficult win
To grasp the danger right here, it’s essential to take a look at the info round M&A offers. Greater than half (50–70%) are thought of failures by way of metrics corresponding to shareholder worth, post-merger efficiency and price synergies (advising on one is profitable, nonetheless, for the consultants concerned).
Opinions by Harvard Enterprise Evaluation and others concluded that round 30–50% of M&A offers create worth for the buying firm’s shareholders, whereas sometimes, many see the share worth fall. A majority of acquirers overpay and underdeliver on synergies (hiya to the Ellisons, house owners of Paramount, and congrats on the Warner Bros deal).
Sure, a majority of shareholders within the firm being acquired rating a premium, but when it’s being paid within the acquirer’s inventory, then its a problem to win while you’re on each side of the commerce.
Only a fast reminder of how robust mergers might be.
In 2021, Simply Eat Takeaway (JET) – the UK company that shut down Menulog in Australia last year – purchased US rival Grubhub for US$7.3 billion. Lower than 4 years later, in late 2024, JET offloaded the business for US$650m – a $6.5bn loss. JET itself was taken over for US$4.2bn 12 months in the past.
And Australian startup Sendle, which merged with two similar US delivery businesses in mid-2025, is now in liquidation, having ceased trading in January as the post-merger.
And who can neglect Rupert Murdoch shopping for MySpace 20 years in the past for US$580 million, then promoting it for $35m.
After all, everybody has fingers crossed that the Eucalyptus deal is a roaring success and a shot within the arm for Australian startups and buyers having been pining for amid an absence of liquidity occasions as a number of VC funds attain the top of their 10-year lifespans.
However first up, it’s all fingers in founder mode for the Eucalyptus workforce to earn what they’ve labored the previous seven years for.
