Hims & Hers buoyed by record revenue growth in 2022, defying broader health tech market trends

Hims & Hers almost doubled its revenue in 2022, buoyed by strong growth of its online health and wellness business.

The company, which went public two years ago and sells hair loss and sexual health products, brought in revenue of $527 million, up 94% from $272 million a year ago, according to its 2022 financial results released Monday. For the fourth quarter, the company's top line rocketed by 97% year over year to reach $167.2 million. That's compared to $85 million in 2021.

Hims & Hers shares rose 9% in after-market trading Monday.

Hims & Hers lost $10.9 million, or 5 cents a share, in the quarter, compared with a loss of $31.2 million, or 15 cents a share, in the same period a year ago.

For the full year, the company reported a net loss of $66 million, an improvement from a loss of $108 million in 2021.

For 2022, adjusted EBITDA was a loss of $15.8 million compared to a loss of $30 million for 2021.

The company's top and bottom lines beat Wall Street estimates as analysts expected revenue of $161 million for the quarter.

The telehealth company, which sells prescription and over-the-counter drugs online as well as personal care products, also reported adjusted EBITDA profitability of $3.9 million in the quarter, marking a first for the company, according to executives.

The company's core products include solutions for men for dermatology issues, hair loss and sexual health. Hims has since added a women’s health business, called Hers, that focuses on birth control, sexual health and skin and hair care products.

Hims & Hers sells its health and wellness products directly to consumers through its online store, its app and through at least 13 retail partners including CVS, Walgreens, Walmart and GNC. The virtual care company also is teaming up with Carbon Health to offer patients in California direct access to providers for in-person medical appointments at clinics.

Andrew Dudum, CEO and co-founder of Hims & Hers, described the financial results as an "exceptional finish to a record year" during the company's earnings call.

The company exited 2022 with more than 1 million subscribers, up 88% from 2021, and provided more than 10 million cumulative medical visits during the year, Dudum said.

"We find ourselves at an inflection point in which we're reaping the benefits of our size and scale," Dudum told investors.

With the upward momentum of its continued growth, the company is now projected to hit $1.2 billion in revenue by 2025 and adjusted EBITDA of at least $100 million, Dudum said.

The company's revenue growth was driven by recurring online subscriptions for its health and wellness products. In the fourth quarter, online revenue increased 106% year over year to $161 million. For the full year, online revenue increased 94% year over year to $503 million.

"Throughout 2022, we saw strong momentum from our established offerings such as men's sexual health and hair loss, as well as several of our emerging offerings," Dudum said.

With its strong revenue growth and shrinking losses, Hims & Hers is bucking the overall health tech market's downward trend.

According to A2 Strategy Corp., in January 2022, public companies across the health tech landscape had lost $190 billion in market value from their all-time highs (73%). By November, even more value has been eroded—over $215 billion or 81%, Ari Gottlieb with A2 Strategy Corp. wrote in a LinkedIn post. Digital health company Babylon is down 91% from a year ago, while Teladoc is down 64%. GoodRx has dropped by 90% since going public in September 2020, and Talkspace also is down 90% since going public in 2021.

Hims & Hers, by contrast, is up 59% in the past six months. The company went public in January 2021 via a merger with special purpose acquisition company Oaktree Acquisition Corp. in a deal that valued the company at $1.6 billion.

Dudum told analysts the company is focused on four strategic pillars: building a trusted brand, deploying leading technology, developing innovative products and services and ensuring clinical excellence.

The company's strong financial performance also comes as big players like Amazon are moving into the healthcare market. Amazon recently launched a new virtual medical clinic that aims to treat common conditions like allergies, hair loss and skin conditions.

Dudum described the current market as "advantageous" for Hims & Hers. "I genuinely believe the industry we're in, this kind of mix between consumer business and healthcare will likely generate one of the largest industries in the country, if not the world eventually. I think some of the largest and most valuable businesses in the world will likely end up in this industry," he said.

He added, "I think we are very clearly blazing that path as the leader and taking that forward. And I think, as long as we continue to focus on those four pillars. Those four pillars I think really are the bread and butter of what's working and what's delivering a holistic start-to-finish experience that is really unlike anything in the market."

Dudum told investors he sees opportunities for the company to expand in new health categories to address prostate health and testosterone as well as fertility, menopause, weight management, cardiovascular conditions, diabetes and mental health issues.

In January, the company inked a high-profile partnership with actress Kristen Bell to serve as a mental health ambassador for the Hers brand. According to the company, the aim of the celebrity partnership is to "combat stigma surrounding mental health and encourage conversation and exploration of treatment for people struggling with anxiety and depression."

"We're experiencing a truly unique moment in history, a moment where customers expect hyper personalization on demand, access and price transparency, a moment where technology and AI are capable of helping deliver both speed and accuracy in a complex analysis. And lastly, a moment where trust is a driver of consumer purchase behavior, and where authentic brands are expected to reach out and build deep and enduring relationships with customers," Dudum said during the earnings call.

Hims & Hers is guiding for first-quarter 2023 revenue of $175 million to $180 million and adjusted EBITDA of $3 million to $6 million, reflecting an adjusted EBITDA margin of 2% to 3%.

For 2023, the company is forecasting revenue of $735 million to $755 million and adjusted EBITDA of $20 million to $30 million, reflecting an adjusted EBITDA margin of 3% to 4%.

Hims & Hers Chief Financial Officer Yemi Okupe told analysts the company can generate adjusted EBITDA margins of between 20% to 30% in a "five-year plus horizon."