After $1.6B blank-check deal, Hims & Hers plots expansion into more conditions
When Hims first launched in 2017, it was decidedly a men’s wellness company.
The startup made a splash with cheeky ads for erectile dysfunction medications, hair loss treatments and skincare products that people could order from the comfort of home. A few months later, it launched a similarly branded site for women, Hers.
But now, on the heels of an IPO, Hims & Hers is charting a course into more clinical services.
“That’s part of why we named this business Hims & Hers, to build that broad health and wellness platform and brand that can stand for healthcare in general so we would have the ability to help patients across a whole range of different issues,” CEO and Co-Founder Andrew Dudum said in a phone interview.
The startup began trading on the New York Stock Exchange on Thursday under the stock ticker “HIMS.” It went public through a merger with a special-purpose acquisition company, a subsidiary of Oaktree Capital Management, in deal that valued the startup at $1.6 billion. Its stock was trading just below $16 per share by Thursday afternoon.
In the last year, Hims & Hers quickly pushed forward with two big expansions as the Covid-19 pandemic drove more patients to virtual care. It rolled out asynchronous consults with a clinician for common issues, such as allergies, colds and rashes, and added mental healthcare with access to anonymous support groups and psychiatry evaluations through a video visit. Though patients can receive some common medications for anxiety or depression, the startup does not offer scheduled drugs on its platform.
Like all of its services, these appointments are structured around cash pay — Hims & Hers doesn’t take insurance.
Going forward, Dudum said the company would have a “huge continued focus” on mental health, primary care, and dermatology. He is also looking to expand into other common conditions in the future, such as diabetes, high cholesterol, and infertility, one by one.
“What you’ve seen from us in the last couple of years is pretty consistent with how you’ll see us deliver in this year and the next, which is a just a really constant expansion into new areas that we know our patients have a high prevalence of issue with,” he said.
Hims & Hers contracts with medical groups, who can write prescriptions or refer patients to care after a virtual consultation that involves users filling out a questionnaire. Though its website is very much oriented around the products themselves, from prescription hair loss medications to a range of supplements, Dudum said there isn’t pressure for physicians to write scripts.
“The physician has full independent decision making,” he said. “This might happen 10% to 20% of the time — the physician might feel that medication isn’t the best option… or frankly, even in-person consultations might be required.”
Many of its users receive its products through recurring subscriptions. It had more than 280,000 subscriptions as of September 30.
Another piece of the startup’s plan for the future is to partner with more brick-and-mortar providers for when patients need to be seen in-person. Hims & Hers struck contracts with Ochsner Health in New Orleans, Mount Sinai Health System in New York City, and most recently, Privia Health, a national physician organization. Through its partnership with Privia, patients can access providers in Washington D.C., Georgia, Maryland, Texas and Virginia.
“There’s far more we can partner on than compete on,” Dudum said. “The way that traditional brick-and-mortar health systems make their money is not by treating patients with acne, or a patient coming in for a checkup on anxiety and depression.”
Hims & Hers has also partnered with pharmacy fulfillment services, such as TruePill and Curexa, to deliver prescriptions to patients. But the company is now in the process of rolling out its own at-home fulfillment pharmacy in a push to verticalize the business, Dudum said.
For the first nine months of 2020, the startup reported $107.3 million in revenue, nearly double the $57.8 million it saw during the same period in 2019.
It reported a net loss of $12.9 million from January to September 2020, a significant improvement from its $59.7 million net loss during the same period in 2019. It had accumulated a deficit of $166 million as of September 30.
Part of the reason for the change was that the company slashed its marketing spending, and while this resulted in fewer net orders, the average order value nearly doubled from $30 to $59, according to the company’s prospectus.
Photo credit: Screenshot of Hims website