Hims & Hers has big ambitions to become healthcare’s front door – The Average Joe

    Hims & Hers has big ambitions to become healthcare’s front door

    Victor Lei — Head of Research

    November 16, 2021

    Hims & Hers

    November 16, 2021

    Men, there’s no shame of needing a little boost. According to Hims & Hers, 20% of men experience erectile dysfunction (ED) in their 20s, while 30% do in their 30s.

    Hims & Hers (NASDAQ:HIMS) built a $1.6B business in providing treatments for stigmatized conditions like ED, along with hair loss, skincare and mental illnesses.

    Hims & Hers is a potential compounder — and grower

    Founded in 2017, H&H is a direct-to-consumer healthcare brand providing various medications discreetly online. H&H differentiated itself by focusing on younger consumers, building a strong healthcare brand and opening up the discussion on difficult topics.

    H&H went public in 2021, rising as high as $25 before falling 67%.

    • Expected sales growth of 77% in 2021 — despite forecasting 30% at the end of 2020.
    • 94% of H&H’s sales are through recurring subscriptions with high margins of +70%.

    At the core of H&H is a marketing and branding machine — succeeding with clever marketing, unique branding and a focus on customer experience.

    Beyond ED and hair loss…

    H&H’s CEO has big ambitions to turn H&H into a $20B business — from its current $1.4B — which will require going beyond hair loss and ED:

    • Launched mental health products and a telehealth platform for virtual care during COVID.
    • Expanded into dermatology (skincare) products — and acquired UK-based dermatology brand, Apostrophe, in 2021.

    H&H has plans to expand into other treatments for diabetes, high cholesterol and infertility — while building a tech and logistics powerhouse in the meantime:

    • Built its own pharmacy fulfillment centers to handle deliveries faster and cheaper.
    • Launched its mobile app last week for its 500K customers.

    It’s making early investments in tech to go beyond ED and skincare products, but is this enough differentiation to succeed?

    Investors: How big can it grow?

    H&H operates in a market that’s easy for others to enter and its competitors are already showing early signs of struggling:

    • Privately-traded competitor, Ro, last valued at $5B — ~3x more than H&H — was reportedly struggling to grow beyond its ED business.
    • With hair loss and ED only at a combined $7B market size, going further into dermatology (estimated at $44B) will be important for growth.

    H&H is an early-stage company, with a goal of becoming healthcare’s front door. CEO and cofounder, Andrew Dundum, is invested in this vision with over 10% ownership of H&H —  high insider ownership often being a good sign.

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