Introducing HIMS

Investment Analysis Clubs Saul’s Investing Discussions
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Hims and Hers health is a health company. It started off selling health supplements and has transitioned into more of a full service telehealth provider. It was brought public in October 2020 through a SPAC. I first started looking into the company when I saw that ARK funds had started buying shares.


                        Q1 20		Q2 20		Q3 20
Revenue		        30.1M		35.9M		41.3M
YoY Increase		91%		76%		91%
Gross Margin		69%		71%		76%
Net Orders		546		572		582
Average Order Value	$52		$58		$67

As of June 30, 2020, 91% of revenue was recurring, subscription-based.

It looks to me like the company got its start selling over the counter health products - primarily for sexual health and physical appearance (skin, hair). It has now added telehealth allowing it to sell products requiring a prescription. Hims and Hers now also has a focus on mental health and primary care.

The website is modern and looks more “fun” and trendy than a typical health site. I like the focus on issues that people might be reluctant to see a doctor for.

When I googled the company, google told me that people searching for hims and hers also search for allbirds and peloton. That strikes me as a good sign that they have their marketing right.

I’ve opened a small position.

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They have obtained a unique trust relationship with their clients; this has established them as the only viable DTC player in the telehealth space that I’m aware of. Potential for extreme optionality IMO. Long $HIMS 2%

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Don’t mean to be too harsh, but this is an atrocity - erectile pills and cures for baldness now into telehealth. There’s not a microscopic ounce of authenticity to any of it. This is the Helios & Matheson (MoviePass) of “healthcare” - no competitive advantage, no defensible tech, just a quick cash grab that will enrich only the initial shareholders and leave the rest of their investors holding worthless shares when it goes bust.

This is an awful, awful, just plain awful, and I mean awful, awful company.

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"They have obtained a unique trust relationship with their clients; this has established them as the only viable DTC player in the telehealth space that I’m aware of. Potential for extreme optionality IMO. Long $HIMS 2% "

There are so many competitors already. See Lemonaid Health. Or do a search for “sites like forhims”.

Strikes me there’s very little barrier to entry here. They may be first to market, I’m not sure, but there’s nothing proprietary about the technology. Honestly, an average web designer/coder can probably clone something like this in his/her spare time.

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@BroadwayDan - thanks for the comment. I was surprised when I first saw the investment from Cathie Woods’ firm, as my vague impression of Hims was that it is a modern well-marketed snake oil salesman. I could be very, very wrong but my concerns were somewhat alleviated by poking around the website. I’ll list out some of my thoughts and observations below, but I’d be very interested to hear from where your conviction comes.

General Observations:

  • The involvement of doctors/telehealth gives me higher confidence in the service and products. Not foolproof, by any means, but a positive indicator.
  • The products listed as popular/top treatments are primarily well accepted prescription drugs (Viagra, Cialis, birth control, finasteride) or frequently used well accepted over the counter items (minoxidil, skin care products, acne cream, etc). All of these are broadly accepted products with large markets.
  • There is a supplements section, but even that seemed pretty mainstream to me - multivitamins, melatonin, etc.
  • I have never used the service, so my observations are based on surface level website info.

Mental Health:

  • The mental health treatment is the part of Hims that I find most promising. One of the biggest problems with treating depression is that those suffering from it don’t seek treatment.
  • Hims seems well positioned to reach this pool of untreated people. It is an easier, less embarrassing, lower-barrier method to obtain treatment.
  • The products and services offered seem to be in line with the best standards of care: diagnosis, prescription medication, and anonymous online support groups. It will soon offer talk therapy, too.
  • Given the online connection with patients, Hims is well placed to reach out to patients who stop taking mental health medication, another key problem. This gives them an extra shot to identify problems, change medication if needed, and hopefully help people get better.

On the company/financial side, I would love to see a breakdown of where revenue comes from and statistics on customer retention. I found customer retention info that was two years old and looked OK, but it concerns me that I couldn’t find anything more recent.

Thinking it over, in some ways, it almost feels to me that rather than packaging snake oil as real medicine, they have done the opposite - taken real medical treatment and packaged it as trendy, branded products that feel cooler than a trip to the doctor’s office. This approach to medical issues that people are reluctant to bring up with doctors seems to me that it could be a winning formula.

Again, these are just my thoughts and I could be completely wrong. I’d love to hear more of the counter argument.

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I think the customers who come to the site to get erectile pills and baldness cures are likely going to be hesitant to seek mental health treatment. They may be seeking online help for those issues because they are too embarrassed to do so in person and/or they are more secretive people by nature. They may be reluctant to divulge more than they need to and won’t seek out therapy, which is 45 minutes of talking all about yourself.

Also, men are much less likely to seek mental health treatment so the conversion rates from erectile pill customers to mental health client may ultimately be really low (at least not enough to boost revenue in any significant way). I would also imagine that online mental health treatment is a low margin business because the company has to pay the therapists a sizable chunk of the fee collected for each session.

Finally, there are online companies that solely focus on providing online mental health treatment and may become the go to place for therapy. These are some possible counter-arguments that come to mind.

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@InvestorMookie: You asked about financials and a breakdown of revenue…

There’s an investor presentation from October on their site:
https://investors.forhims.com/events-and-presentations/prese…

Go to slide 32, it quite clearly shows their revenue is 57% from sexual health products and 35% for hair/dermatology. The other 7% is categorized as “wholesale”. So probably just selling those same generic drugs to other stores.

They talk a lot about future opportunity of telehealth in their investor presentation, but there is no revenue from this area.

My analogy: Hey, I own a used car lot. Look, I have this slick app to sell you a used car. AND there is this new opportunity with electric vehicles. No, I don’t make any yet, but can you give me 5 billion so I can look into it? Let me tell you, there is a HUGE TAM.

Daws

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You are not understanding the potential appeal of “mental health treatment appointments” delivered by someone who claims to be a slim-but-chesty blonde 26-yr-old that prefers the company of older men. In actuality, this person will be located in a phone bank in a prison facility. ( I jest, slightly. )

imo, Broadway Dan pretty much ‘nailed’ this company. What they are selling is brown paper boxes to men who don’t want to look across a pharmacy counter at a pharmacy tech who knows what they are buying. The technology and telehealth vocabulary wrapped around it is just a ‘fig leaf’. :laughing:

I won’t be anywhere near this one.

-Another Rob

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I won’t be anywhere near this one.

This is the stuff of late-night infomercials.

This is not a growth company (or at least the type of growth we are seeking here), and does not belong on this forum IMO.

🆁🅶🅱
post tenebras lux
For not in my bow do I trust, nor can my sword save me.

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That is just one qualifying statistic. There are many reasons a company can grow that fast and not all of them are good or sustainable. To measure the quality of any given company requires a LOT more context. I believe the board’s pinned threads go through a lot of thoughts on the subject.

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Hence why I don’t check out this board much anymore. There’s plenty more high growth stocks out there besides the same 10 that have been talked about on repeat for the past 10 months.

Like these ones?

  1. SE 20.2%
  2. FSLY 19.6%
  3. PTON 14.6%
  4. TDOC 13.1%
  5. CRWD 13.0%
  6. NET 9.07%
  7. APPS 3.83%
  8. DOCU 0.95%

Oh, wait…that’s your portfolio from just four short months ago (https://discussion.fool.com/october-portfolio-34634773.aspx). I checked it twice hoping to find an idea that hadn’t been discussed here, but those all look pretty familiar (and nice write up by the way!). You unfortunately haven’t provided any updates since. I see you recently chimed in on SKLZ, which is on my watch list. Full disclosure, I took a peek at HIMS based on this thread but just can’t warm up to it at all. Sorry. Please don’t take even further offense.

I’m up 180% with no margin in the past 90 days.

In all sincerity, good for you. Those are awesome returns, and I genuinely mean that. Since you’re obviously no longer in the same 10 as everyone else, would you mind sharing your portfolio? You still have 11 days to throw something together for February. And man, I sure do hope you’re in Twilio! I’m tired of writing about it all by myself every month and not having anyone join me. I totally think it deserves “same 10” status.

Rather than me teach you all over a long write up…

Well, that sure stinks since this whole board is about teaching and long write ups. Unfortunately, write ups are usually the best way to exchange ideas on…you know…written message boards. Do you do any fireside chats on Clubhouse or WhatsApp or anything like that instead? As an investor my greed is miles ahead of my ego, so I’m always looking for better companies to juice my returns. If you can do that, I’ll take whatever teaching you can give me.

But why present my high growth stocks when when they ignorantly get banned?

I can’t speak for anyone else, but I honestly don’t remember to which names you are referring. I only know it couldn’t have been SKLZ or LSPD or FVRR or YALA or PINS or MGNI or API or AVLR or even HIMS, the very stock we are talking about now. Regardless, to eliminate this issue would you mind starting a board? Here’s the link: https://discussion.fool.com/request.aspx. I’d suggest “Banned but Still Better than Saul’s” as a possible name. Please e-mail me a reply when you get it set up because I don’t want to create any clutter here. I’ll meet you there!

Oh, and I 100% hope HIMS does what you’re looking for when it reports on 3/18. I’m always happy when investing decisions work out no matter who it is making them. We’re all in this together after all.

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