Hims & Hers Health Files for IPO Amid 67% Revenue Surge, Nearing $1B Milestone

During the “winter” of the past year, many digital health unicorns that once boasted impressive performance and high expectations have faltered, with the most notable examples being the formerly hyped Pear Therapeutics and Babylon Health, which sequentially declared bankruptcy. Beyond these cases, a greater number of digital health companies are struggling to survive on the brink.

Nevertheless, a lesser-known digital health company has bucked the trend in this challenging environment—phrases such as “67% revenue growth, surpassing $1 billion,” “already profitable,” and “a 30% surge in stock price” stand out as a refreshing anomaly in the current landscape.

What is the secret behind the success of Hims & Hers, the digital health company? Which high-growth sectors are driving its rapid expansion? The following article reveals the answers.

Let’s first examine Hims & Hers’ strong performance. In fiscal year 2023, Hims & Hers achieved revenue of $842 million, representing a 67% increase from the previous fiscal year’s revenue of $503 million. This figure also exceeded the company’s own revenue forecast disclosed in its fiscal 2022 annual report, which had projected 2023 revenue to range between $735 million and $755 million.

What is particularly remarkable is that, since the announcement of its performance forecasts, the company’s actual revenue has exceeded the prior year’s projections for three consecutive years. Clearly, even the company itself likely did not anticipate such rapid growth. From fiscal year 2018 to fiscal year 2023, its six-year compound annual growth rate (CAGR) in revenue reached an astonishing 77.4%.

Hims & Hers Has Seen Remarkable Growth Over the Years

It is worth noting that this company, founded in November 2017, had only $27 million in revenue in 2018. In less than seven years, its revenue has grown 31-fold, transforming it into a behemoth on the verge of surpassing $1 billion in annual revenue.

Let’s go back to November 2017, when founder Andrew Dudum established the digital health company then known as Hims, after identifying several gaps in the young men’s health market. Its initial business focused on two niche segments of men’s health, and it later expanded into the women’s health sector, rebranding as Hims & Hers.

After several years of business expansion, Hims & Hers has successively entered the fields of mental health, primary care, and men’s cardiovascular health, and is currently expanding into disease areas such as sleep disorders, reproductive health, diabetes, and obesity. Its positioning has long since evolved into that of an internet healthcare provider targeting younger generations (Generation X).

Returning to Hims & Hers’ annual report. In terms of net profit, Hims & Hers reported a full-year net loss of $23.546 million, a significant narrowing from the previous year’s loss of $65.678 million. Based on adjusted EBITDA, the company achieved a profit of approximately $49.51 million for the year, with an adjusted EBITDA margin of 6%. By comparison, in 2022, these two figures were a loss of $15.779 million and -3%, respectively.

Steady Quarterly Revenue Growth

Hims & Hers’ exceptional growth momentum is more evident from its consistent quarterly performance. In the fourth quarter of fiscal year 2023, the company generated $247 million in revenue, representing a steady 8.8% sequential increase from the previous quarter’s $227 million and a 47.9% year-over-year growth compared to $167 million in the fourth quarter of fiscal year 2022. Notably, its revenue has grown for twelve consecutive quarters since the fourth quarter of 2020.

Based on the annual report, Hims & Hers’ revenue is primarily dependent on the consumer segment. The vast majority of the company’s revenue comes from subscription fees paid by online subscribers, while revenue from wholesale operations is negligible. Statistics show that although the number of subscribers has grown rapidly over the past two years, the average monthly spending per subscriber has remained relatively stable, hovering around $53.

Clearly, at the current stage, the number of subscribers is a very important metric for it. In this regard, its growth has been quite substantial. By the end of fiscal year 2023, its subscriber base had reached 1.537 million, representing a significant 48% increase from the 1.04 million recorded at the end of fiscal year 2022.

On a quarterly basis, Hims & Hers has maintained rapid growth in its user subscription numbers since its inception, with only a slight decline in the fourth quarter of 2019 (likely due to the impact of the COVID-19 pandemic). Since then, it has achieved high-speed growth in subscriber count for 16 consecutive quarters.

Notably, Hims & Hers boasts high subscriber loyalty. Its subscription model primarily consists of two types: one involves a multi-month upfront subscription, reflecting a significant level of user trust in the brand through long-term commitment; the other is a single-month subscription that users may choose to renew or cancel upon expiration, indicating a more tentative approach. According to the annual report, 1.242 million users opted for the former, far exceeding the 295,000 users who subscribed on a monthly basis with renewal upon expiration.

Hims&Hers Subscribers Steadily Increase Quarter by Quarter

In fact, this user subscription preference has remained consistent since performance data began being disclosed in 2021, and over time, the proportion of users opting for long-term multi-month subscriptions has continued to grow. In the first quarter of fiscal year 2021, multi-month subscribers accounted for approximately 58% of the total; by the end of fiscal year 2023, this figure had risen to around 81%.

Although the types of conditions targeted by Hims & Hers do indeed require long-term service usage, this alone does not directly account for the remarkably high proportion of multi-month subscriptions. After all, these medications are not exclusively provided by Hims & Hers, and it is not particularly difficult for users to find alternative options. The only plausible explanation is that users are highly satisfied with its services, resulting in exceptional user stickiness.

These users’ sustained spending has also laid the foundation for Hims & Hers’ rapid growth. According to the company’s annual reports, from 2019 to 2023, the compound annual growth rate (CAGR) of revenue from new users exceeded 84%. During the same period, the CAGR of recurring revenue from existing users also surpassed 74%. The two groups have contributed roughly equally to overall revenue, maintaining an approximately 50/50 split.

Based on these strong operational metrics, Hims & Hers has issued a rather optimistic outlook for its fiscal 2024 performance: it projects revenue to grow by 34%–38% year-over-year, pushing full-year revenue above the $1 billion mark to reach $1.17–$1.20 billion. Full-year adjusted EBITDA is also forecast to reach $100–$120 million.

Hims & Hers Expects Annual Revenue to Surpass $1 Billion Mark This Year

In stark contrast to the dismal performance of most digital health unicorns, Hims & Hers has delivered exceptional results. Coupled with optimistic earnings forecasts, its stock price has naturally surged. The company went public via a SPAC merger in January 2021, achieving a valuation of $1.6 billion, with its share price briefly surpassing $20. However, during the subsequent SPAC downturn, although Hims & Hers maintained consistent revenue growth, its stock price lingered below $10 for an extended period, dipping as low as approximately $3.

As Hims & Hers’ financial performance continues to surge, investors are eagerly buying in with cash in hand. On the second day after the release of its fiscal 2023 annual report, its stock closed at $13.43, a 31% jump from the previous day’s closing price of $10.25. Since then, Hims & Hers’ share price has remained above $14 and is now challenging the $15 mark.

What Did Hims & Hers Get Right? Its Development Trajectory in Recent Years May Offer Some Insights. As Previously Mentioned, Hims’ Initial Business Primarily Targeted Two Niche Segments of Men’s Health.

One concern is hair loss. According to data from the American Hair Loss Association, 66.7% of American men will experience some degree of noticeable hair loss by age 35, and by age 50, approximately 85% of men have significantly thinning hair. However, few people realize that 25% of American men actually begin their struggle with hair loss before the age of 21. Without intervention, complete baldness becomes merely a matter of time.

The second area is men’s health, with a primary focus on erectile dysfunction (ED). Influenced by factors such as environmental pollution and stress, ED—a condition often associated with aging—is increasingly affecting younger men. According to a 2014 report in Men’s Health, approximately 40% of men in their 30s already exhibit symptoms of ED.

Perhaps they have not yet realized the severity of the problem, or they are too embarrassed to seek help, or perhaps the products on the market mainly cater to the hair loss needs of middle-aged and elderly people, failing to stimulate the purchasing desire of young men. In any case, the needs of this patient group have not been adequately met. Hims has accurately grasped the psychology of its target customer base and effectively penetrated the market. This can be summarized into the following three key points.

First, there is the patient-centric service experience. Men have always been goal-oriented shoppers who make their purchases and leave immediately, preferring a straightforward approach. For them, sifting through a vast array of products with little substantive difference is a significant hassle. Therefore, Hims has radically streamlined its entire service process. Its website features a clean, user-friendly interface and presents medical information in an accessible manner. Patients can easily identify their specific condition, answer a few simple questions, and undergo online physician review, after which medications and consumer health products are delivered to their doorsteps on a regular basis.

Furthermore, Hims offers only a few basic kits with clearly defined indications and symptoms, eliminating any ambiguous or misleading options. This approach also aligns with the general shopping psychology of men.

Secondly, although its product portfolio is relatively simple, Hims has introduced highly mature consumer goods branding strategies into the healthcare sector. Its product packaging is exquisite and thoughtfully designed, completely concealing any pharmaceutical attributes and aligning more closely with stylish everyday consumer products. For instance, Hims has designed its erectile dysfunction (ED) medication in the form of mints. This approach effectively addresses the stigma associated with the condition among young men, rapidly building brand recognition and fostering a degree of customer loyalty.

In its marketing, Hims has adopted a style markedly different from the traditionally coy approach of this sector. Its advertisements are bold yet humorous and metaphorical, eliciting knowing smiles, while the choice of models and color palettes clearly reflects a youthful aesthetic.

Finally, Hims’ products are extremely competitively priced. After all, one of the reasons the founders established Hims was that similar products were overly expensive, posing a significant financial burden on young men. Hims is able to offer low prices primarily by adopting a direct-to-consumer (DTC) model, which eliminates intermediary costs. Furthermore, in these therapeutic areas, there is little difference between generic drugs and their brand-name counterparts. This allows Hims to confidently utilize lower-cost generics and effectively bridge the perceptual gap between generics and brand-name drugs among patients through strategic brand marketing.

Following this, Hims’ focused strategy enabled it to rapidly accumulate a fast-growing user base and achieve substantial sales volume in this vertical disease area. This positioned the company at the core of the entire value chain, granting it greater negotiating power with upstream and downstream industry partners, thereby further reducing product costs and ultimately making Hims’ products 50%–80% cheaper than those in the retail market.

This strategy achieved tremendous success, making senior management realize the immense potential of the health market among the younger generation (Generation X). It is generally believed that young people are less prone to health issues and therefore do not constitute a particularly high-quality market. Consequently, most healthcare companies have chosen middle-aged and elderly populations as their target customers.

Hims’ team took the opposite approach, choosing Generation X as its entry point. One reason is that competition in the health sector for middle-aged and older adults is intense; as a startup, Hims faces well-established medical giants with years of market presence, making it exceedingly difficult to stand out.

In fact, young people today face numerous pressing health issues, such as hair loss and erectile dysfunction (ED). If left unaddressed in the early stages, these conditions will inevitably progress into more severe health problems. Furthermore, younger demographics exhibit greater acceptance of emerging innovations like telemedicine compared to middle-aged and older adults, which facilitates further cost reduction or service quality enhancement through the integration of technological solutions in the future.

More importantly, as time goes on, Generation X will inevitably transition into middle and old age. By addressing the essential health needs of young people today to build brand loyalty, Hims will naturally become their go-to choice when they encounter health issues in the future, given its long-standing presence in their lives.

From this perspective, Hims’ team clearly has a long-term strategy and significant ambition.

Guided by this vision and its proven business model, Hims rapidly expanded into other sectors with similar characteristics. Just months after its founding, the company capitalized on this momentum to launch the Hers brand, entering the women’s health market, and rebranded itself as Hims & Hers.

Subsequently, Hims & Hers began expanding this model to other disease areas. With the launch of its female-focused brand, Hers, skincare emerged as a natural area for expansion. As expected, this segment achieved strong progress, further driving Hims & Hers’ expansion in this field.

In July 2021, Hims & Hers acquired Apostrophe, a startup that provides online telemedicine treatment for common skin conditions such as acne and rosacea. Its business model is very similar to that of Hims & Hers: users first complete a questionnaire and submit photos of their skin, then consult with a physician online who prescribes the appropriate treatment. Subsequently, Hims & Hers’ distribution network mails the medications directly to patients’ homes.

Given the largely identical business models, Apostrophe can be seamlessly integrated into existing operations. Furthermore, this acquisition further strengthens Hims & Hers’ domestic delivery network, enhancing its pharmaceutical distribution capabilities.

In April 2019, Hims & Hers began piloting mental health services by offering anonymous group therapy sessions to users. The onset of the COVID-19 pandemic accelerated the company’s expansion into this sector, leading to the official launch of its telehealth mental health services in July 2020.

This is also a key area of focus for Hims & Hers. In an exclusive media interview, company executives stated that while many patients are returning to in-person medical services as the pandemic wanes, telemedicine still holds significant advantages in the realm of mental health. This is because telemedicine offers greater accessibility to mental health services: patients can connect with a licensed practitioner online in under six hours, whereas wait times for in-person appointments can extend up to eight weeks.

Primary care is another area that Hims & Hers views favorably. Around the same time it launched its online mental health services, it also introduced online primary care services, allowing users to consult clinicians virtually for common health issues such as allergies, colds, and rashes.

As a further expansion into these areas, conditions such as sleep disorders, reproductive health issues, diabetes, and obesity have been incorporated into subsequent strategic planning.

As its business scope continues to expand, Hims & Hers has begun to shift its positioning, frequently comparing itself with prominent telehealth companies such as Teladoc, Amwell, One Medical, and GoodRx, in an effort to establish its identity as an internet healthcare provider.

Hims & Hers’ Market Share Steadily Rising

According to the annual report disclosures, Hims & Hers has made significant progress in its telehealth business. In competition with direct rivals such as BetterHelp and Roman Health, Hims & Hers holds a clear lead in both overall market share and new-user market share.

As the company entered fiscal year 2023, Hims & Hers continued to expand its business. In August 2023, Hims & Hers announced a partnership with the American Heart Association to offer users a “dual-purpose” medication targeting both erectile dysfunction (ED) and cardiovascular disease, thereby entering the men’s cardiovascular health market.

This is not a spur-of-the-moment business expansion. In fact, given that erectile dysfunction (ED) has been shown to be strongly associated with cardiovascular disease in men, and that ED medications themselves possess cardiovascular therapeutic properties, this business area can also be regarded as an extension of existing operations.

In the third quarter of 2023, Hims & Hers partnered with MedMatch to integrate MedMatch’s artificial intelligence into mental health treatment. MedMatch’s AI will learn from millions of anonymized data points derived from Hims & Hers’ millions of customers, with the aim of identifying in real time the most suitable treatments tailored to each patient’s unique needs in the future.

In December 2023, Hims & Hers announced the launch of its weight-loss business, offering weight-loss medications, educational content, and digital tracking tools. Patients seeking weight loss will first undergo an online consultation with a physician. If eligible, patients will receive a personalized treatment plan based on multiple factors.

The first step is to obtain medications, which may include personalized combinations of bupropion, metformin, naltrexone, and topiramate with vitamin B12. Of course, these are all established drugs that support weight loss when combined with diet and exercise. According to statements from senior company executives, there are plans to introduce GLP-1 medications once their supply becomes more stable in the future.

In addition to providing medications, the weight loss program will also offer educational content such as nutritional guidance, meal plans, mental health information, exercise recommendations, and sleep advice. Furthermore, consumers can track their weight loss progress, along with related metrics including water intake, physical activity, and sleep.

In addition to the AI beta version, all other services require an additional subscription fee. The cardiovascular disease program costs approximately $30–$45 per month, while the weight-loss program is priced at around $79 per month. On one hand, Hims & Hers’ existing user base is indeed likely to have risk factors in the company’s newly expanded disease areas; providing low-cost, one-stop early intervention to eliminate these risk factors before conditions become severe is certainly beneficial. On the other hand, this represents Hims & Hers’ attempt to boost average revenue per user by leveraging the high stickiness of its current customer base. After all, relying solely on user growth has its limits.

Undeniably, the Hims & Hers model still has many areas that require refinement, yet its robust growth offers significant insights. On one hand, the rise of healthcare consumerism represents a major and long-term trend. While consumer-centric experiences have permeated nearly every aspect of daily life, they remain scarce in most medical services. By adopting a patient-centric approach and delivering superior healthcare service experiences, providers can firmly retain patients. In the long run, this trend will also drive fundamental changes within the healthcare ecosystem.

Furthermore, unlike other sectors, different diseases may have entirely distinct ecosystems, making it difficult for a comprehensive, all-encompassing platform to gain universal user acceptance. Perhaps a more effective approach to earning user trust is to focus on a specific disease area, similar to Hims & Hers, by providing services and products that cover the entire patient journey—pre-diagnosis, during diagnosis, and post-diagnosis—to meet patients’ needs at various levels. As its executives have stated, winning in the competitive landscape of internet healthcare requires delivering specialized and personalized services.

Finally, as observed by Hims & Hers, young people and even younger adolescents are not free from health concerns. Understanding them, identifying their pain points, communicating and intervening in ways they find more acceptable may well be the key to future success. Of course, this presupposes a long-term commitment to the healthcare industry.

References:

Elise Reuter，MedCity.com：Men’s wellness startup Hims rolls out telepsychiatry

Marissa Plescia，MedCity.com：Hims & Hers Dips Into Men’s Cardiovascular Health

Marissa Plescia，MedCity.com：Hims & Hers Gets Into Weight Loss Treatment

Marissa Plescia，MedCity.com：Hims & Hers CMO: The Healthcare Industry’s Strengths and Weaknesses Regarding Telehealth