Telehealth company Hims & Hers has been an outlier among public digital health companies in that it's invoking optimism among Wall Street investors.
While other public digital health companies have yet to climb out of their stock price free fall, Hims & Hers is up 244% from one year ago. The direct-to-consumer company, which offers telehealth care and medical prescriptions for sexual health, hair loss, mental health and dermatology, has gone from trading at $3.11 per share in May 2022 to $10.71 per share as of Thursday afternoon.
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On Monday, Hims & Hers reported revenue of $190.8 million for the first quarter of 2023, an increase of 88% compared with $101.3 million in 2022. The company also doubled its subscribers to 1.2 million from 2022 to 2023.
Hims & Hers co-founder and CEO Andrew Dudum spoke on potentially getting into the GLP-1 agnostic weight loss drug market, how much the company spends marketing to consumers and more. The interview has been edited for clarity and length.
Immediately following your earnings call there was a bit of a selloff on Wall Street. How much does that concern you?
To be honest, I think internally we have an exceptionally long-term orientation with this business. I think it's probably one of the greatest opportunities to create shareholder and customer value and wealth over the next decade. The stock is up 300% or 400% in the past year, right? Swings of 5% or 10% don't really affect us. It is likely people just moving money one way or the other.
Your marketing spend went from $48 million in 2022 to $97 million this year. Is that attributable to higher customer acquisition costs or growth goals?
We're enabling ourselves to lean in and take share. I think in a lot of situations, [we want to] position the company a year or 18 months from now to be wildly ahead of our competitors. I think there's this advantage that we have from the scale, efficiency and the ruthlessness of the execution in the last three and five years that put us in this position to take the share. We're taking the opportunity to do so [by looking at a] longer term horizon.
What are new types of segments drawing your interest the most right now?
The categories that get me most excited have a couple of overlapping dynamics. First, they have mass-market implications for society. Let's say metabolic health or cardiovascular health. These are things that affect [up to] 50% of the country. Then you look at the percentage of these patients that are not getting treated and I think it is really powerful.
If you can find categories where there's huge benefit to helping the masses, [specifically, where] the masses are unaware of treatments [or] they’re uneducated about what's available...That is where we have an incredible opportunity. The combination of innovation to break down some of those barriers that are preventing treatment and then overlaying that innovation in categories where there are tens of millions of people in need of care. That's personally what I think gets us most excited and where we spend most of our time.
There’s a lot of craze around weight loss drugs like Ozempic, Wegovy and other GLP-1 agonists—especially in digital health. What are your thoughts on that segment?
I think there's a lot of excitement for good reason. You have tens of millions of people that are suffering from the disease of obesity, which obviously affects everything from muscular health to diabetes and cardiovascular health. For the first time in a long time, it looks like we have some treatment options that could be exceptionally efficacious. We're really excited by it. We've always felt that it was in the best interest of the company to be methodical and thoughtful in our launches and to watch as things take shape. In a lot of situations, that means not being the first mover. It means making sure that we are bringing to market something that we can 100% stand by from clinical efficacy to availability to affordability, and from a differentiation standpoint with the market. I think there are still a lot of open questions in our mind as to how we're going to bring this to market in a way that meets the bar that we have for us as a company. We've been recently bringing on a lot of specialists that are helping us shape our opinion. But there is clearly a great opportunity. I just think there's, frankly, a few open questions for us that we're still working through.
The price of GLP-1 agonists are high and supply is limited. How do you manage working in an environment like that, which is different than many of the conditions you serve where there are affordable generic alternatives?
I think the scalability of the Hims & Hers model allows for a lot of different business models. It allows us to have cash pay models and also fairly simple insurance integrations, where co-pays and coverage are consistent and reasonable. In a world where GLP-1 [medications], or let's say, a branded pharmaceutical is the first line treatment, we're well equipped to handle that circumstance.
I think there are still just questions, frankly, as to what is the first line treatment? The insurance companies and self-insured employers are making it very clear that they don't believe GLP-1s should be…I think there's just a big open question as to really what is the right clinical category for treatment? What's the right cadence of a patient? Where should they start? How should they progress through that? That’s where we're working with specialists. There are tremendous opportunities to leverage a lot of unknown medications that have really great clinical efficacy that have been around for a long time.
This story first appeared in Digital Health Business & Technology.
