Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hims & Hers Health Inc (HIMS, Financial) reported a 77% year-over-year revenue increase, reaching $401.6 million in the third quarter.
- The company surpassed $50 million in adjusted EBITDA, reflecting a 13% adjusted EBITDA margin.
- The subscriber base grew by 44% year over year, with over 2 million subscribers by the end of the third quarter.
- Hims & Hers Health Inc (HIMS) has successfully expanded its personalized solutions, with over 1 million consumers benefiting from these offerings.
- The company is making significant strides in democratizing access to high-quality, personalized healthcare solutions at mass market prices.
Negative Points
- Gross margin declined by 2 points quarter over quarter to 79%, primarily due to the scaling of the weight loss specialty.
- There is ongoing pressure from gross margin headwinds associated with new product launches.
- The company anticipates continued gross margin degradation in the fourth quarter as the weight loss specialty gains traction.
- Marketing expenses remain high, accounting for 45% of revenue, although this marks an improvement from previous quarters.
- The regulatory landscape for GLP-1 solutions remains uncertain, posing potential challenges for future growth.
Q & A Highlights
Q: Are you providing what the GLP-1 contribution was in the quarter, either members or revenue would be fine?
A: Thanks for the question, Allen. This is Yemi, we provided the year-over-year growth rate of the subscriber base, excluding GLP-1s. So that number was north of 40% year over year.
Q: Can you describe what the GLP-1 business looks like a year from now, considering different form factors and growth opportunities?
A: Thanks, Allen. We are looking at a diverse breadth of the portfolio within the product assortment. The oral business, which we launched, is delivering 70% of the weight loss of GLP-1 medicines for $70 per month. We also have medications like liraglutide coming to the platform. We believe the composition of these avenues will enable a durable business across weight management, regardless of the shortage dynamics.
Q: What are some key reasons driving patients to drop out during the initial period of GLP-1 treatment, and how are you thinking about the average duration of GLP-1 patients on the platform?
A: The reasons for dropouts are primarily due to side effects like nausea and vomiting. Our platform's provider communication and technology help mitigate these issues, resulting in better adherence. The average duration for GLP-1 patients is around five months, driven by strong provider-patient partnerships.
Q: Can you confirm if around 10,000 users are on the personalized titration schedule for GLP-1s, and will you be able to continue compounding these doses once shortages abate?
A: The 10,000 figure was specific to a study on patient outcomes. Our platform caters to personalization needs, and the compounding exemption allows for necessary clinical personalization, which we believe will continue to be respected across the industry.
Q: How are you effectively routing patients to the oral weight loss option versus GLP-1s, and what is driving the top of the funnel?
A: We offer a wide range of treatments and help patients identify what is right for them. The oral treatment option is robust and delivers significant weight loss at a lower cost, attracting consumers naturally. The known safety profile and different formats also appeal to many.
Q: With Dr. Sheppard joining as CMO of Hers, what is the potential for new sub-verticals within the Hers category, and how are traditional categories performing?
A: We're excited about Dr. Sheppard's expertise, particularly in areas like menopause and hormonal therapy. The Hers business is growing rapidly, driven by diversity across mental health, dermatology, and metabolic health. The core business is also seeing robust growth with increased personalization options.
Q: How are you thinking about the pricing structure overall, and do you plan to lower prices in 2025, especially for weight loss?
A: We constantly evaluate efficiency gains to pass value to consumers. While we may test price as a lever, we're also exploring creative opportunities beyond price to enhance consumer value.
Q: Can you provide additional color on the GLP-1 contribution in the quarter and how it impacted AOV?
A: Subscriber growth is primarily from the core, but GLP-1 adoption is accelerating. The GLP-1 contribution can be approximated by considering the subscriber count and average revenue per subscriber.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
