Website:
https://www.hims.com
Market capitalization: $12.5 billion
Risk profile: High
Context
Hims & Hers is a digital health and wellness platform in the USA.
The company delivers telemedicine advice, personalized treatments and prescription products on topics such as hair loss, skin, weight loss, mental and sexual health directly to consumers - with ongoing support throughout the treatment period.
What makes Hims & Hers special is that the company is developing a health platform that is easily accessible, affordable and tailored to the individual needs of patients.tailored to the individual needs of patients.
Hims & Hers thus represents a clear a clear antithesis to the traditional US healthcare a system that is considered expensive, difficult to access and not very patient-oriented. For people without comprehensive insurance cover in particular, good care is often unaffordable. Medication is overpriced, bureaucratic hurdles are high and financial profit often takes precedence over the actual well-being of the patient.
Hims & Hers deliberately takes a another way: 100% digital, aimed directly at men (Hims) and women (Hers), transparent (fixed monthly subscription fee, no hidden costs, self-pay without working with insurance companies) and designed for sustainable recovery.
Already 60% of subscribers already use a personalized treatmente.g.
- an individual dosage (e.g. 25mg with a slow increase to 50mg or 75mg instead of the classic standard variant of 100mg)
- a drug whose active ingredients treat several problems simultaneously (e.g. "3-in-1" or "5-in-1")
- or a different form factor that is more suitable for a patient (e.g. a chewing gum instead of unpleasant tablets).
What do optimists say?
Optimists see Hims & Hers as the possible "Netflix" or "Amazon" of the healthcare industry - in other words, a platform that, like Netflix, creates close customer loyalty with personalized content (affordable, available at any time and tailored to individual tastes) or, like Amazon, rethinks the healthcare system with the greatest possible customer focus, efficient logistics and economies of scale.
Many areas of our daily lives have already been digitized and turned upside down, e.g. e-commerce, music and video streaming, online payment, passenger transport or sports betting. When will it be the turn of modern healthcare?
The following benefits of Hims & Hers are repeatedly emphasized by optimists:
- The addressable market for the diseases covered by Hims & Hers today is theoretically over 100 million potential customers in the U.S. alone. over 100 million potential customers.
- Issues such as weight loss, sexuality, mental health and hair loss are areas where people are increasingly seeking discreetly and from the comfort of their own homesolutions from the comfort of their own home. Who likes waiting weeks for an appointment, sitting unnecessarily in a waiting room and having to talk to a stranger about a personal taboo subject?
- Hims & Hers provides its customers with clear advantages compared to visiting a doctor on site or alternative online solutions: Speed (<24 hours from request to treatment), transparent and usually lower price, convenience (24/7 availability conveniently from home or on the go), no stigmatization (especially for unpleasant illnesses) as well as data-driven, hyper-personalized and therefore more successful treatment than a standard app (at least that's what the company claims).
- After very strong growth, the company now has over 2.4 million subscribers - making Hims & Hers the leading telemedicine provider in the USA.
- The brand appears modern, empathetic and open - this creates trust and captures the zeitgeist. spirit of the times. This is also reflected in the US Apple App Store, where Hims ranks at #7 and Hers on #17. This puts the company ahead of its direct competitors Ro Health (#22), LifeMD (#87) and Amazon One Medical (#94).
- In recent years, Hims & Hers has successfully successfully expanded into new healthcare areas and this increasingly efficiently. Typically, it takes the company 18-24 months to scale a new area to 100,000 subscribers - in the recent weight loss area this was achieved in just 7 months.
- The recently announced partnership with pharmaceutical giant Novo Nordisk - around the popular weight loss drug Wegovy - could mark the beginning of a new role for Hims & Hers. With access to millions of paying subscribers, the company could act as a direct distribution platform for large pharmaceutical companies.
- Not only is the company continuously covering more healthcare areas, but it also acts as a fully comprehensive health and wellness platform: Lab tests (to be launched in 2025; customers will then be able to take a blood test in the comfort of their own home), online diagnosis, medication prescription, logistical processing and aftercare. Data collection along this process could give the company a structural competitive advantage in the long term and enable it to enter preventive care/longevity. Data is power: having the biggest and best data set of millions of patients allows you to serve them more efficiently and provide better treatment.
- Many products (e.g. for weight loss, hair loss, erectile dysfunction, depression) require regular intake or application - this creates predictable, recurring sales and high customer high customer loyalty. It's like a Netflix or Spotify subscription and who wants to cancel that?
- The increasing vertical integration (i.e. covering the steps in the value chain) of the company in terms of technology and infrastructure increases automation (which lowers costs) and opens up even more extensive personalization options for patients.
- Hims & Hers has achieved the rare feat, Hims & Hers manages the rare feat of combining rapid sales growth with financial discipline: despite investments in marketing, technology and infrastructure, the company is already profitable - and is generating steadily growing cash flows. Given the early stage of growth, this is a remarkable achievement by the management and a strong signal for the scalability of the business model.
- The management has set itself the ambitious goal to increase sales from USD 1.5 billion (2024) to at least USD 6.5 billion by 2030. That would be more than quadruple in 6 years. This is to be achieved through even greater personalization, expansion into new healthcare areas (e.g. testosterone, menopause, longevity), internationalization (currently only available in the USA), improvement of aftercare through the use of intelligent technology and the expansion of strategic partnerships (as recently with Novo Nordisk). This is ambitious, but not impossible. After all, the company has always exceeded its targets to date.
What do pessimists say?
Here are some of the most common criticisms of the company and possible risks:
- Hims & Hers is just a good marketing company - after all, more than 40% of annual turnover is spent on (viral) marketing. If you take your foot off the gas pedal, the new customers won't come.
- It's only a matter of time before the first health risks for consumers become known and there is lasting damage to the company's image.
- The company is operating in a legal gray areaas the broad-based personalization of patented drugs on this scale is not permitted - lawsuits and bans could be threatened and jeopardize the company's unique selling proposition.
- Drugs for weight loss (so-called slimming injections)which are becoming increasingly popular, have recently been one of the main drivers of the sharp rise in sales - growth will slow significantly if these drugs are no longer allowed to be sold on the same scale as before.
- The company's growth depends on the cost-effective acquisition of new customers customers. Growth could slow significantly and the business model become less profitable as soon as acquisition costs increase.
- Large pharmaceutical companies such as Novo Nordisk or Eli Lilly could strengthen their own direct-to-consumer business activities and snatch customers away from Hims & Hers.
- There are only low barriers to market entry - competition among online pharmacies is fierce (e.g. Amazon, Ro Health, etc.), differentiation is difficult and other providers with similar products and telemedicine services could soon emerge.
- And much more...
Conclusion
In just a few years, Hims & Hers has become a leading provider in the field of digital healthcare - with a with a clear focus on user-friendliness, personalization and affordability. The market is large, the growth considerable and the profitability at this early stage impressive.
However, despite the strong operating performance, the share is not a sure-fire success:
- The share is currently trading at around €50: after a strong rise, particularly since 2024 - driven by the trend towards weight loss syringes (GLP-1), the Novo-Nordisk partnership and the strong operating results.
- The share is extremely volatile: Up or down 10-20% or more in one day is not uncommon. The company is still relatively small and reacts extremely sensitively to new news or rumors.
- The high short ratio of over 30% is striking: Many market participants are deliberately betting on falling share prices - an expression of deep skepticism about the company. This bet could be based on doubts about the sustainability of growth, potential legal risks or the assumption that the current success story will soon lose momentum. At the same time, this could give the share a boost if the pessimists are wrong.
- A fair value? If Hims & Hers achieves its ambitious targets for 2030, a share price of over €100 would be conceivable in the long term. Based on this target and my valuation assumptions, the estimated fair value of the share is in the range of €30-35. Setbacks would come as no surprise due to the high volatility and could open up new entry opportunities at this level - provided the operating performance is right.
Here is my base case for the share:
Thanks for reading!
