Hims & Hers launched a virtual weight management program in December, adding injectable weight loss drugs in May, and that investment is quickly paying off.
The online health and wellness company's quarterly revenue jumped 52% year over year to $315.6 million, sailing past the $304.2 million Wall Street analysts were expecting. A year ago, the company brought in revenue of $207.9 million.
Hims & Hers reported net income of $13.3 million, or 6 cents per share on an adjusted basis, topping Wall Street estimates of 4 cents in earnings per share. That compares to a loss of $7.3 million a year ago.
Adjusted EBITDA was $39.3 million for the second quarter of 2024 compared to $10.6 million for the second quarter of 2023.
The company ended the quarter with nearly 1.9 million subscribers, up 43% year-over-year. Hims & Hers added 155,000 new users to its platform in Q2 alone.
The company reported free cash flow of $47.6 million for the second quarter of 2024, exceeding the entire amount of free cash flow generated in 2023, Okupe said.
Shares of the company jumped 6% Monday in after-hours trading.
Hims & Hers is a multispecialty telehealth platform that connects consumers to medical care for numerous conditions related to mental health, sexual health, dermatology and primary care. The company expanded into heart health in August and weight management at the year of the year.
Based on its strong user growth, Hims & Hers boosetd its 2024 revenue guidance to a range of $1.37 billion to $1.40 billion and adjusted EBITDA guidance to a range of $140 million to $155 million.
Almost 100,000 consumers have subscribed to Hims & Hers' weight management offering in just over seven months since launch, Yemi Okupe, the company's chief financial officer, told investors on Monday during its Q2 earnings call.
Hims & Hers' weight management program initially offered consumers access to oral medication kits and it added compounded GLP-1 medications in May.
"Our historical timeframe for a new category to reach meaningful scale has been one and a half to two years," Okupe said, noting that the weight loss service line reached that scale in just over seven months.
"In weight loss, we have eclipsed this mark in just over seven months, a remarkable start that we believe underlines both our improving ability to ramp new specialties, and the tremendous need for these solutions," executives said in a letter to shareholders.
In less than a year, the company's weight loss specialty has scaled to a run rate of $100 million in annual revenue, Andrew Dudum, CEO and co-founder of Hims & Hers, told investors Monday.
The Hims & Hers weight management portfolio includes oral medications with active ingredients that help to suppress appetite and curb cravings, including Bupropion, Metformin, Naltrexone and Topiramate with Vitamin B12. "This offering utilizes different combinations of personalized compounds to address the underlying conditions clinically tied to obesity, including metabolic disorders, depression and overeating habits," Dudum said.
The company then added compounded GLP-1 injections with the same active ingredient as buzzy branded weight loss drugs Ozempic and Wegovy, executives said. Hims & Hers is working with a compounding pharmacy partner to offer the medications.
Dudum said the company would add certain branded weight loss medications when the supply is available and has plans to bring on other compounded GLP-1 injections like Liraglutide.
Dudum said the long-term trend of consumerization of healthcare continues and he expects this trend to only accelerate as consumers seek out speed, convenience and a personalized experience from companies that offer healthcare services.
"An approach to democratizing access to high-quality personalized solutions on our platform at an affordable price continues to resonate with consumers," Okupe said. "We are seeing this improve our ability to attract new users to longer-tenured specialties, while also allowing us to more rapidly scale new specialties. During the second quarter, these dynamics drove an acceleration in revenue growth and record profitability levels. We are updating our full year outlook to reflect this improving momentum and continue to believe we are on a clear path toward serving tens of millions of customers as we scale this increasingly powerful and efficient model."
The company now offers compounded GLP-1 drugs to consumers in more than 30 states, covering over 60% of the U.S. population, Dudum noted. "We anticipate nationwide availability before year end," he said.
"Given the impact obesity can have on an individual and the severity of conditions it can lead to, we expect weight loss as a specialty to be foundational over the coming decade in the way Hims & Hers impacts the lives of our consumers and the way we influence the healthcare industry," Dudum added.
The company said pricing for weight loss medications starts at $79 per month for oral medication kits and $199 per month for compounded GLP-1 injections. Pricing includes unlimited medical consultations with a licensed provider.
By comparison, the price tag on branded weight loss drugs like Wegovy can total more than $1,000 a month per person without insurance.
Company executives also touted early results from its weight management program. Based on self-reported data from approximately 12,000 customers subscribed to a Hims & Hers weight loss offering, customers report having lost on average 10.2 pounds while on compounded GLP-1 injections and 6.3 pounds while on non-GLP-1 compounded oral medication kits in their first month.
The company plans to double down on its weight loss drug strategy. To expand its compounding capabilities, it plans to buy a FDA-registered 503B outsourcing facility. In a filing with the U.S. Securities and Exchange Commission, the company said it agreed in July to pay about $31 million in cash and stock for a U.S.-based compounding pharmacy.
"This acquisition will present additional opportunities across specialties such as hormonal therapy and other treatments that require sterile compounded medication in the near term. This further enhances the durability of our supply chain for compounded GLP-1s and positions us to improve accessibility as we verticalize the operations," Dudum said.
The GLP-1 drug market has been dominated by pharmaceutical giant Novo Nordisk and has faced supply constraints in recent months as the drugs get expanded approval from regulators and increased health coverage.
When a drug is in shortage, compounders may be able to prepare a compounded version of that drug if they meet certain requirements of the Food and Drug Administration, the FDA said in a January release. The FDA said patients should not use a compounded GLP-1 drug if an approved drug, like Wegovy, is available.
The FDA recently took Eli Lilly’s diabetes drug Mounjaro and its obesity counterpart Zepbound off its shortage list, Fierce Pharma reported.
In response to a question from an analyst about the durability of the weight loss drug business given the evolution of the market, Dudum said he believes Hims & Hers is well positioned given the ongoing demand for solutions and the company's approach to offer customized oral medication kits.
"At a high level, you should expect some degree of fluidity over the next couple of years. I think there's going to be not only a changing market dynamic with the current medications that are on shortage, but I think there's also probably going to be five or 10 new medications that come to market in the next few years, if you look at the clinical studies and the FDA pipeline," Dudum said.
"Where I think we get a lot of confidence is that there's a really broad set of offerings under the hood that we believe in combination results in a really durable business line. The oral compound that we have launched, that is a vacuum of itself and is the fastest-growing specialty we've ever launched on the platform, achieving north of $100 million run rates in six or seven months. We expect huge evolutions in that platform and expansion of offerings there that patients really do love and are having great outcomes."
He added, "On the injectable side, I think there's going to be, without question, a long horizon of on and off availability given the demand. We see thousands of patients coming every single day saying that they can't get access to these medications. We suspect that we'll be able to offer commercially available dosages in some form for an extended period. On top of that, as supplies grows, we are excited to bring the branded medications for patients that are interested onto the platform, as well as the personalized dosages."
Hims & Hers has increasingly focused on offering personalized treatments to consumers by leveraging technology and data.
Executives said four out of our 5 specialties now carry at least 10 personalized solutions. More than 40% of its subscribers use a personalized solution on the platform.
Hims & Hers plans to launch access to new multi-condition treatments, with a particular focus on those that are inter-specialty or enable expansion into adjacent markets, Dudum said.
The company projects it will have north of 1 million subscribers with a personalized subscription by the end of the year, close to the aggregate number of subscribers it had on the platform just two years ago, Okupe told investors Monday.
For the third quarter, Hims & Hers expects revenue between $375 million to $380 million and adjusted EBITDA of $35 million to $40 million.