"Hims & Hers Stock Report (Ticker: HIMS)" is the latest episode of Chit Chat Money. In this episode, they discuss the rapid growth of telehealth start-up Hims and Hers. Topics covered include the reasons behind HIMS's quick growth, emerging competitive advantages, thoughts on the founder and management team, and modeling out financials. They also touch on red flags with customer reviews and whether one of the hosts will buy the stock.
Hims and Hers has achieved rapid revenue growth and impressive gross profit margins, with a compound annual growth rate of 104% and margins reaching 82%.
The management of Hims and Hers raises red flags, including questions about the CEO's focus, disproportionate voting power, and executive compensation practices.
Hims and Hers successfully executes its marketing strategy, utilizing a user-friendly platform, smart campaigns, and a focus on disrupting the traditional medical industry.
Deep dives
Overview of the Business Model and Offerings
Hims and Hers is a consumer-first platform that connects customers with doctors and offers telehealth consultations, digital prescriptions, and pharmacy fulfillment. They focus on sexual wellness, hair loss, anxiety, weight loss, and more. Their websites have a clean design and provide clear information on their products. Hims and Hers sells the majority of its products through monthly subscriptions, making it convenient for customers. Their revenue has grown impressively, and they have achieved strong gross margins.
Financial Performance and Outlook
Hims and Hers has experienced rapid revenue growth, with a compound annual growth rate of 104%. Their gross profit margins have also expanded impressively, reaching 82%. While they have been unprofitable, their operating loss has been shrinking, and they are getting closer to break-even. The company invests heavily in sales and marketing to drive growth, and they have shown some progress in leveraging marketing expenses. Future success will depend on their ability to continue scaling revenue and managing marketing costs.
Concerns and Questions about Management
There are some red flags regarding the management of Hims and Hers. The CEO and founder, Andrew Dutem, has additional involvement in other companies and investments, raising questions about his focus. The disproportionate voting power he holds and related party transactions with Atomic Labs also raise concerns. Additionally, executive compensation practices, such as large stock-based awards and high base salaries, may not align with the best interests of shareholders. These factors may impact investor trust and perception of the company.
Marketing strategy and potential competitive advantage
The podcast discusses the marketing strategy of the company and how they use a combination of a good product suite, a user-friendly website and app, and smart marketing campaigns to drive recurring customers to a subscription service. The speaker emphasizes that the company has executed its strategy better than its competitors. They also discuss the importance of ongoing marketing spend for the company's success. The company aims to eventually generate billions in revenue and achieve leverage on marketing spend. They highlight the company's focus on being on the right side of the innovator's dilemma and disrupting the traditional medical industry.
Convenience and target market
The podcast explores the convenience factor of the company's services, particularly for customers in their 20s, 30s, 40s, and even 50s who often don't have a primary physician and find the traditional process of obtaining prescribed medication time-consuming and confusing. The speaker mentions that the company offers an easy and efficient online platform where customers can have products delivered to their doorsteps. They highlight that the company's target market seems to be internet-savvy individuals in the 20 to 30-year-old age demographic. The speaker suggests that the company's brand and product offerings align well with this target demographic.
*A High-Yield Cash Account is a secondary brokerage account with Public Investing. Funds from this account are automatically deposited into partner banks where they earn a variable interest and are eligible for FDIC insurance. Neither Public Investing nor any of its affiliates is a bank. US only. Learn more at https://public.com/disclosures/high-yield-account
