Snapshot

Healthcare is rapidly evolving with the integration of digital technologies, fundamentally changing how medical services are accessed and delivered.

Hims & Hers Health (Hims) is contributing significantly to this transformation, offering a consumer-focused platform that simplifies the fulfillment of health and wellness needs. Bridging the gap between healthcare providers and patients, the company uses a robust digital infrastructure to facilitate telehealth consultations and online prescription services.

The platform’s popularity stems from the convenience of accessing healthcare discreetly and efficiently from home. This is all thanks to access to a highly qualified provider network and a clinically-focused electronic medical record system. It also supports digital prescriptions and seamless cloud pharmacy services through a subscription model, facilitating convenient access to treatments across various health conditions.

Beyond its core telehealth services, Hims offers a comprehensive range of health and wellness products available online and in major retail locations across the United States. The company’s mobile apps also provide users with wellness content, community support, and educational programs designed to promote lifelong health.

Hims is currently experiencing rapid growth, having facilitated nearly twenty million telehealth consultations. The company’s strategic focus is on expanding its digital services and increasing access to quality care across all 50 states and the United Kingdom. Key growth strategies include improving its electronic medical records system, scaling its cloud pharmacy operations, and broadening the range of conditions treated through its platform.

Ultimately, its goal is to help transition clients from traditional office visits to a predominantly digital interaction model, while offering high-quality, convenient, and affordable care.

Background

Hims launched in 2017, initially focusing on men’s health issues such as hair loss and erectile dysfunction before expanding into women’s health with the introduction of Hers in 2018. From the outset, the company distinguished itself by combining medical consultations with the delivery of prescription medications and wellness products, all facilitated online. This approach not only provided convenience but also addressed privacy concerns, making it particularly appealing to younger demographics initially reluctant to seek traditional healthcare routes for sensitive issues.

As the company grew, so did its product range. By the end of its first year, Hims had expanded beyond sexual health products to include treatments for dermatological conditions and mental health. Each new service was designed to integrate seamlessly with their existing platform, ensuring that users received consistent and reliable healthcare delivery.

The expansion continued with the company adding services for primary care and other specialized medical fields by 2019. This broadened the company’s appeal, attracting a larger user base interested in a wider array of health services, including chronic condition management and preventive care.

In 2020, amidst the global health crisis, the company experienced a significant surge in demand. The pandemic underscored the importance of telehealth, and Hims was well-positioned to meet this increased need. This period marked a crucial phase in the company’s growth, highlighting the scalability and effectiveness of its business model.

To further cement its market position, Hims went public in January 2021, after which it continued to innovate, expanding into new markets and increasing its retail presence. Its products became available in top retail locations across the United States, further diversifying its distribution channels. The company also extended its reach beyond the U.S., making inroads into the United Kingdom, beginning its international expansion.

Today, Hims continues to evolve, consistently enhancing its platform with new technologies and services aimed at improving patient outcomes and accessibility to care.

Leadership

Co-founder and now chief executive officer, Andrew Dudum, has been instrumental in guiding the company through significant growth and innovation since its inception, having overseen the development and expansion of the company’s digital infrastructure and product offerings. Before Hims, he co-founded startup studio and investment fund Atomic Labs and has since played an integral role in developing a dozen innovative companies including Bungalow, Homebound, TalkIQ, and Terminal as the fund’s General Partner.

Customer

Hims has carved out a significant niche in the health and wellness sector by integrating modern technology with a wide array of health-related products and services. This comprehensive approach is tailored to address various consumer needs through a digital-first platform, encompassing both prescription and over-the-counter offerings.

The company’s core products are focused on areas where ongoing care and recurring medication are common. These include treatments for sexual health, hair loss, dermatology, and mental health – areas particularly suited to telehealth solutions. These services are complemented by a broad range of wellness products like vitamins and supplements, which cater to general health needs.

Gaining traction in the product lineup are its over-the-counter drugs and devices along with cosmetics and supplement products. These range from general wellness items such as melatonin and biotin to more specialized skincare products like moisturizers, serums, and sunscreens. The company also provides sexual health products including prophylactics and lubricants, as well as hair care products such as shampoos and minoxidil treatments.

Many of these products are available under the Hims & Hers brand, using a “white-label” strategy where items developed by manufacturers are sold under the company’s branding, either solely or co-branded. The development of these products often involves collaboration between Hims and their manufacturers. For cosmetics and supplement products, manufacturers create formulations with input from the Hims Product Research & Development team. This ensures that while the manufacturers are responsible for securing necessary FDA approvals and maintaining good manufacturing practices, Hims contributes to product design and quality control through independent laboratory testing and compliance assessments.

Hims employs a subscription model for most of its offerings, allowing customers to choose delivery frequencies ranging from every 30 to 360 days. This model not only ensures convenience for the user by providing continuous care without repeated purchasing decisions but also offers the company a predictable recurring revenue stream.

Hims caters to a wide range of customers including everyone from young adults seeking dermatology treatments and mental health support, to older individuals needing sexual health and hair loss solutions. The convenience of accessing these services and products through a sophisticated online platform and mobile apps meets the needs of busy, health-conscious consumers who value both privacy and convenience. Consumers are increasingly being drawn to the platform due to the high-quality personalized solutions that are also cost-effective.

Thematic

Central to Hims robust growth strategy and innovative methods for expansion is the utilization of diverse marketing channels, including social media, television, radio, and physical brand advertising campaigns. This omnichannel strategy enhances brand awareness and customer acquisition, essential for sustaining growth in a competitive market.

The company’s platform is designed to scale efficiently, allowing for the seamless addition of new products and services. Recent launches, such as new prescription products in weight loss, sexual health, and dermatology, as well as hair care and supplement retail products, have proven the adaptability of their platform. By focusing on subscription-based offerings, the company expects to grow revenue predictably and sustainably, leveraging a model that provides recurring revenue streams.

Hims’ innovative and personalized products have played a critical role in its ability to attract new customers while retaining and expanding within its existing customer base. Customers often serve as brand ambassadors, driving organic growth through word of mouth and user-generated content. This organic growth is further supported by strategic partnerships with leading talent and influencers who enhance product visibility and brand credibility.

The company continues to drive higher adoption and retention by launching innovative products and services across various health conditions. Recent additions include Hard Mints for erectile dysfunction (ED), ED + Heart Support for cardiovascular health, along with climax control pills. Other launches include hair vitamins and supplements and a doctor-developed weight loss program. These offerings aim to address a wide range of health needs through personalized telehealth solutions, enhancing the company’s ability to capture significant market opportunities due to the prevalence and ongoing nature of these conditions.

To support this expansion, recent years have seen Hims invest in infrastructure and operations, opening a dedicated mail-order pharmacy in Ohio, along with the acquisition of YoDerm, which further bolstered their prescription fulfillment capabilities. These facilities have enabled efficient, personalized, and cost-effective drug delivery, enhancing the company’s operational leverage and capacity to scale quickly.

Geographical expansion is another critical component of Hims’ growth strategy. The company’s digital-first, cloud-based business model has driven rapid adoption in the U.S. and has proven scalable across new markets. The expansion into the United Kingdom, facilitated by the acquisition of Honest Health, is being used as a model for further international growth in other geographies, offering a significant opportunity for global market penetration.

Financials

Hims has been on a rapid expansion trajectory since going public, delivering consistent high double-digit year-over-year revenue growth. At the end of 2023, the company hit revenue of $872.0 million, up 65% on 2022. This was primarily driven by growth in subscribers, which generated recurring and stable Monthly Online Revenue per Average Subscriber, as well as growth in Average Order Volumes and Net Orders. This momentum has continued in 2024, with revenue for the first quarter coming in at $278.2 million, an increase of 46% year-over-year, as subscribers grew to a record 1.7 million.

The company has also seen a notable improvement in its gross margins, which increased to 82% in the first quarter of 2024, up from 78% at the end of 2022. This improvement is largely due to the uptake of longer-term subscriptions, which result in lower recurring costs. Additionally, Hims reported a net loss of $23.5 million for 2023, a significant reduction from the $65.7 million net loss in 2022. This positive trend has also continued into 2024, with the company achieving a net income of $11.1 million in the first quarter, compared to a net loss of $10.1 million in the same period in 2023.

Looking ahead, management is forecasting to close out FY24 with total revenue of $1.20 to $1.23 billion, representing year-over-year growth of 42%, matching consensus expectations. Analysts are also expecting full-year earnings per share of $0.17 for FY24, representing a strong improvement from a loss of $0.32 per share in FY23.

Risks/Competition

The competitive environment for Hims is rapidly evolving, with significant players in the telehealth and direct-to-consumer health and wellness sectors. Major competitors include Teladoc Health, which offers a comprehensive suite of virtual healthcare services and has a substantial market presence, and Amwell, known for its telemedicine solutions and partnerships with prominent healthcare providers. Additionally, while Amazon’s initial attempts to enter the healthcare space have seen challenges, its vast resources and logistical network could disrupt the market at any time.

At this point, Hims differentiates itself through its comprehensive direct-to-consumer model that offers personalized solutions across various specialties. The company’s strong brand and consumer trust, bolstered by a focus on education about telehealth benefits, also provide a competitive edge. While affiliated pharmacies ensure quality control and cost efficiency, enhancing service delivery and affordability.

Conclusion

Hims & Hers Health has effectively tapped into an enormous market by offering a comprehensive suite of health and wellness products that cater to a wide array of consumer needs. Through its innovative approach to health care, strategic partnerships in manufacturing, and flexible, consumer-friendly service models, the company is well-positioned to continue its growth in the expanding digital health marketplace.

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