Currently, Hims & Hers Health has a stock price is around $24.5, and the market cap is only $5.55 billion, about one-third of SoFi's. The company's stock price performance over the past year has been very, very strong, up by 194%. However, why has this happened?
So, what does this company do? Looking at their official website, you can roughly see it as an online pharmacy plus an online small clinic. You can see that their website has many more specialized drugs, such as things to 'have better sex', for erectile dysfunction, for hair loss concerns, for weight loss, or for skin issues, and also including things related to mental health and psychology. Basically, it's not the kind of clinic you would go to if you have a cold. Instead, if you have more specialized needs, you would look for Hims & Hers.
Business Model
Hims & Hers was originally two companies. Initially, in 2017, there was only Hims (HIMS), and as the name suggests, it was designed for men. Then, a year later, Hers (HERS) came out. Their business model is very unique. Whether it's Hims or Hers, it's just the difference between being male or female. You first need to register as a subscriber.
Then, a doctor will have a consultation with you. After the consultation, if needed, they will prepare your prescription directly and send it to you regularly every month. During this period, no matter how many requests or questions you have, Hims & Hers can help you. L ike an all-you-can-eat concept: you pay a subscription fee, get a prescription, and it's directly delivered to your door, plus unlimited consultations.
Moreover, in terms of price, its attractiveness is very strong. Compared to going to a regular CVS, the price is not transparent. If you are in the US, you know that CVS sometimes negotiates prices for you, theoretically giving you the cheapest price, but it's not always the case. And if you go to see a doctor, it can sometimes be expensive. Thus, Hims & Hers is changing the way people obtain prescriptions, which is one reason why I consider it a disruptor, just like how Amazon changed people's shopping habits, and how Google changed people's approach to the internet.
Recent Success
Now, let’s delve into how this company has achieved great success on the consumer side. Looking back two years, to Q4 2022, the entire company only had 15% of people using their personalized plans. But after two years, this is increased to 50.5% more than half. Let’s put it this way, if you didn't trust them, would you use their personalized, customized plans? You wouldn't. So, this is one indicator of their major success.
Another indication of consumer favour is their total number of subscribers. Recently, it has reached over 2 million. And among these almost 2 million subscribers, 87% of them are using what you see here, 'MTI 30-day subscriber'. What is MTI? The meaning is that you have subscribed to more than one recurring plan. For example, I ordered hair loss lotion here, and then I ordered a weight loss pill somewhere else. Then, I am considered an ‘MTI’, which means at the end of the quarter, I am using two of their subscription plans. This number was 72% two years ago and has now grown to 87%. This shows that people who used their services two years ago trust them more and more. Otherwise, this number wouldn't keep climbing, right? So, the company is truly successful. At least in terms of business expansion, their products and services are liked by consumers, which is the most important part of doing business.
Risks
Having talked about the good things, let's discuss some potentially negative news about Hims & Hers that might lead to potential downfalls. Firstly, at the end of last year, Amazon launched a series of businesses that are basically identical to Hims & Hers – online consultations, obtaining prescriptions, and delivering medication to your door – and they advertised it as being cheaper than Hims & Hers.
Secondly, another headline you will definitely see in Hims & Hers' financial news is GLP-1. What is GLP-1? It's a weight loss drug related to diabetes. However, Hims & Hers hasn't received FDA approval for this specific medication. The reason they can sell it is that the most famous company making GLP-1, the largest pharmaceutical company in the US – well, not quite a pharmaceutical company, but Eli Lilly, everyone has heard of them, right? They specialise in GLP-1 but can't produce enough. So, Hims & Hers uses compounded formulations to oker weight loss packages. Since Eli Lilly's weight loss drug is the most well-known, Hims & Hers faces some competition in this area. Recently, you might have seen news like 'Hims & Hers Health falls as FDA issues unfavorable compounded GLP-1 decision'. Perhaps the FDA came out and said that Eli Lilly's medication is no longer in shortage. So, they warned that the GLP-1 formulations that haven't gone through FDA review should be approached with caution.
Conclusion
To summarize, I believe Hims & Hers is changing the way Americans obtain medication, see doctors, and get prescriptions. You can see this by comparing traditional pharmacies and their own stock price performance.