"We want to build a brand that is a trusted front door to healthcare," says Hims & Hers Health CEO ... [+]
Hims & Hers Health has just announced it is adding Walmart
With success, Hims & Hers is ready to stock all 4,700 U.S. Walmart stores with its expanding range of health and wellness products and supplements.
After launching online direct-to-consumer in November 2017, Hims & Hers’ first incursion into physical retail came in March 2020 with Target
Another heavy-hitter, Walgreens
It’s also moved quickly to expand additional online retail partnerships with Amazon, Urban Outfitters and Revolve, plus on-demand delivery with DoorDash and UberEats. All told, Hims & Hers OTC products are now available in over 11,400 retail doors.
Described as a “telehealth platform that connects consumers to licensed healthcare professionals,” the company came to national attention through its cheeky ads promoting prescription drug treatments for erectile dysfunction from the comfort of one’s home, not in a clinical setting.
ForHims.com also offered prescription treatment options for premature ejaculation, herpes and dermatology, along with access to a primary care physician for other non-critical health needs. ForHers.com came online a year later offering similar online access for primary care, as well as women-centric treatments.
All the while Hims & Hers was expanding its range into nonprescription wellness and health-enhancing products for stress, sleep, skincare and nutritional supplements.
Front door to healthcare
Conveniently and at low cost, Hims & Hers fills a void in the healthcare system that’s become too complicated, too expensive and sadly too inaccessible. “We’re spending more money per capita on healthcare, but essentially the country has never been sicker,” says CEO and co-founder Andrew Dudum.
And the Covid pandemic further stressed the already over-stressed healthcare system. “Something in the range of 85% of rural counties in this country are considered ‘primary-care deserts’,” Dudum says, as the nation faces a critical shortage of physicians now that will only continue to grow.
Hims & Hers telehealth services bridges that gap for concerns that may not warrant a trip to the emergency room or urgent care center and health issues that don’t seem worth a two-month wait and high-priced copays to schedule visit to a primary-care physician.
“We are building a brand that is a trusted front door to healthcare,” Dudum says. For example, a primary-care consultation is only $39 and conducted near instantaneously online. The company’s telehealth consultations have grown from 431k in its first year 2018 to 4.6 million at the close of third quarter 2021.
The company reports some 80% of its customers are new and its new customers in 2021 are spending more, on average $363 in the first twelve months compared to $191 in 2019.
Critical to its long-term growth plans is turning one-time buyers into subscribers. And because its products and services tend to treat chronic conditions, it has a leg up in that regard.
Through third quarter, Hims & Hers filled 3.8 million net online orders with 36% being subscriptions. However, the company doesn’t report the revenue derived from subscriptions.
Retail opens the front door wider
Just like its early ED ads posted in subways and above urinals in sports stadiums, every bottle of Hims & Hers products at retail are a way to spread its message further. In 2021 it shipped nearly 1.5 million retail SKUS, nearly doubling the 850k shipped in 2020.
In accessing its available market, Hims & Hers is targeting what it describes as “massive and underpenetrated” markets, including $3 billion in hair loss, $4 billion in erectile dysfunction, $14 billion in anxiety and depression and $44 billion in dermatology.
Hims & Hers’ revenue growth has been impressive, reaching $149 million in 2020 and which it topped at the close of the third quarter 2021 when year-to-date revenues reached $187 million. Currently, it projects to end 2021 between $263 to $265 million.
Through third quarter, wholesale revenues remain a tiny fraction of total sales, only 3% or $6.3 million compared with $181 million generated online.
However, that share is sure to grow as its footprint in retail grows. And with new customers exposed to Hims & Hers at retail, the company is counting on many of them to follow its bread-crumb trail back to the brand online.
On becoming a household name in healthcare
Wall Street hasn’t been so kind to Hims & Hers. But then, Hims & Hers is playing a long game and investors like it short.
Despite projecting over 70% year-over-year growth for 2021, its adjusted EBITDA is expected in the range of negative $35 to $37 million. Currently its NYSE stock is trading in the $5 range, down from over $20 in February 2021.
However, analyst Michael Wiggins De Oliveira writing in Seeking Alpha sees its long-term potential. He understands the business model of delivering online patient care along with pharmaceutical and OTC solutions in a comfortable environment that is tailor made for the digital-first generation.
And he highlights the long-term value of its subscription model. It took Hims & Hers three years to grow subscription sales from its 2018 cohort of subscribers to a total of $383, whereas in 2021, one-year subscribers had nearly reached that level.
Instead of just being a company in the commoditized business of selling ED and hair loss drugs, “Hims is focused on the patient experience, particularly focusing on millennials and getting these younger customers earlier on in their healthcare journey,” he wrote. “The idea here is that patients build trust with Hims. This will lead to a sticky customer base that's going to feel both comfortable and confident in making repeat prescriptions.”
Building trust is the key ingredient that Hims & Hers is focused on and one that is in short supply in other places after the Covid pandemic.
On the company’s front-door to healthcare strategy, Dudum says, “It’s all about being a trusted place where people can get the highest-quality information, the highest-quality products, whether or not that’s pharmaceuticals, OTC or supplement-based products, and the highest-quality access to specialists and doctors that can help guide them towards great solutions.”
And with a goal of becoming a household name in healthcare, Hims & Hers venture into brick-and-mortar retail opens the door even wider toward reaching that goal.
