E-health and wellness platform operator Hims & Hers Inc. (NASDAQ: HIMS) reported a stellar quarter of growth. The company has expanded its medical offerings well beyond offering discrete erectile dysfunction (ED) medication and sexual health products.
Today, the platform is a comprehensive telehealth platform with personalized healthcare and wellness options. Hims & Hers offers hair loss, skincare, anxiety and depression, birth control, and weight loss medications through subscription plans.
Flywheel model
The company applies discounts to longer subscriptions, which helped drive multi-month membership growth to over a million subscribers. Most of its products are refillable and not just one-time offerings. As customers get comfortable with the service and products, they continue to explore more personalized offerings, feeding the company's flywheel model. This has enabled the company to continue to grow its repeat business, with average order values (AOV) rising 19% YoY, driven by the 56% YoY growth in subscribers with a long-term customer retention target of 85%.
Primary care services
Hims & Hers has embarked on offering virtual primary care services through its network of more than 600 licensed professionals with 24/7 around-the-clock access. The platform has recently started offering cardiovascular health and weight-loss management services, including prescriptions for popular GLP-1 agonist drugs.
The company continues to pursue improved personalized and customizable treatment solutions with its beta launch of MedMatch, which deploys artificial intelligence (AI) and machine learning. They are utilized initially for mental health customers, which has increased to over 125,000 subscribers. The discrete nature of the conditions it treats provides them a niche with patients who feel uncomfortable sharing maladies with their primary care doctors.
Growth tailing off?
Hims & Hers reported a Q3 2023 loss of 4 cents per share, in line with consensus analyst expectations. Revenues grew 56.5% YoY to $226.7 million, beating analyst estimates of $220.08 million. Subscribers grew 56% YoY to 1.4 million. While impressive growth, they tailed off from the 83% YoY revenue growth and 74% customer growth in Q2 2023. Gross margins were at a record high of 82.6%, the EBITDA margin rose to 5.3%, and net margin improved to -3.3%. The company announced a $50 million stock buyback program.
The company's customer acquisition costs (CAC) have been inconsistent, rising to $783 per customer, down sequentially from $989 in Q2 2023 but up from $401 in the year-ago period. Monthly online revenue per active user fell from $56 to $54 in the current quarter YoY. However, net orders grew 33% to 2.22 million, and average order value (AOV) rose 19% to $99, up from $83.
Raised Guidance
Hims & Hers raised its Q4 2023 revenue guidance to $243 million to $248 million versus $227.57 million consensus analyst estimates. It also issued higher full-year 2023 revenues of $868 million to $873 million versus $846.61 million, as consensus analyst estimates suggest. That represents 65% to 66% YoY growth.
The company's long-term goals are 20% to 30% adjusted EBITDA margins with gross margins in the mid-70% range. By 2025, Hims & Hers expects to break $1.2 billion in annual revenues with adjusted EBITDA of at least $100 million.
CEO Insights
Hims & Hers Co-Founder and CEO Andrew Dudum commented, "With customers adopting personalized treatments at rapid levels and our ability to leverage our affiliated pharmacies to bring innovative products at mass-market pricing, our market leadership position will only get stronger, and we are excited to see increased value per customer already as a result." He also noted that the weight management offering will roll out in the coming weeks, offering a portfolio of generic pharmaceutical treatments as mass marketing pricing.
His & Hers Health analyst ratings and price targets are at MarketBeat. Find Hims & Hers Health peers and competitor's stocks with the MarketBeat stock screener.
Daily cup pattern attempt
The daily candlestick chart on HIMS is attempting to complete a cup pattern as shares rise towards the 200-period moving average resistance at $8.46. The cup lip line commenced at the $9.28 peak on August 8, 2023. Shares plunged to a low of $5.65 on October 30, 2023. HIMS formed a daily market structure low (MSL) breakout through the $6.24 trigger on its Q3 2023 earnings release. Shares continued to rise to highs driven by the daily relative strength index (RSI) rising through the 70-band. Pullback support levels are at $7.42, $7.02, $6.60 and $6.24 daily MSL trigger.
