Business is booming for consumer telehealth and wellness brand Hims & Hers as the company charted 94% revenue growth in the first quarter, surpassing $100 million during one quarter for the first time.
The company's top line of $101 million beat both the company's expectations and Wall Street estimates. Hims & Hers reported $52 million in quarterly revenue a year ago.
Hims & Hers is a telehealth company that sells prescription and over-the-counter drugs online as well as personal care products. The company started with four products and has since added a women’s health business, called Hers, that focuses on birth control, sexual health and skin and hair care products.
"People are voting with their wallets," Andrew Dudum, CEO and co-founder of Hims & Hers, told investors during the company's first-quarter earnings call Monday. "We believe the results we'll share today are strong proof for the future of our brand and platform."
Membership subscriptions, a core driver of the company's recurring revenue model, achieved the largest increase in quarterly growth to date, adding over 100,000 new membership subscriptions and ending the first quarter at 710,000, which represents 82% growth, Dudum said.
Hims & Hers' growth is propelled by several market tailwinds, including consumers wanting easier access to healthcare services.
"As prices continue to soar in the traditional healthcare system and as access, convenience and choice continue to remain limited, we believe that more customers will only increase their demand for alternative solutions. This wave is growing and we see it in our business and our metrics weekly. Growth has been stronger than at any point pre- and during COVID, pointing toward a structural change in customer expectations," Dudum said.
Hims & Hers launched a mobile app in January, and quick uptake among consumers also contributed to the company's "breakout growth" in the first quarter, he said.
"I believe this platform could be the future of Hims & Hers. And with such incredibly early adoption rates, over 500-plus five-star reviews and within days of launch breaking the top 100 medical apps on iOS, it is clear that customers agree. In just a matter of weeks, our mobile platform is already showing signs of increased customer stickiness, improved engagement, retention, cross-sale and organic adoption," he said.
Based on its strong start to 2022, the company upped its revenue guidance for the year, now projecting around 50% to 56% growth with revenue coming in between $410 million and $425 million. In its fourth-quarter earnings call in February, Hims & Hers projected 2022 revenue in the range of $365 million to $380 million.
But the digital health company is still not profitable and reported a net loss of $16 million for the first quarter of 2022 compared to a loss of $51 million for the same period a year ago. Hims & Hers' adjusted EBITDA for the quarter was a loss of $6 million compared to a loss of $8.6 million for the first quarter of 2021. The company reported earnings per share of a loss of eight cents, topping analysts' consensus estimate of a loss of nine cents in the quarter.
For 2022, the company also maintains its projection of adjusted EBITDA for the year in the range of a loss $30 million to a loss of $20 million.
Hims & Hers 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.
The company's shares are down 75% from its previous highs in early 2021, and shares are down almost 50% so far in 2022.
Dudum said the company is marching toward "near-term" adjusted EBITDA profitability.
The company invested heavily in platform infrastructure and technology capabilities in the first quarter with a particular focus on building out its pharmacy fulfillment centers in Ohio and Arizona. Hims & Hers plans to move away from third-party pharmacy fulfillment centers for its orders, Dudum said.
"This quarter we are north of 50% of all orders pharmaceutical and over-the-counter rolling through those Ohio and Arizona centers, but we're continuing to push on getting to near 100% as quickly as we can," he told analysts.
Having a verticalized strategy enables the company to offer more customization and personalized experiences to consumers, Dudum said.
"You can imagine, for example, the ability for a patient to open up the mobile app, say they want to add something to the next shipment that's being delivered or just a medication, or introduce a new offering into their existing membership," he noted.
The company also has ramped up partnerships with brick-and-mortar retailers and healthcare providers to build out its services. In January, Hims & Hers announced a tie-up with retail giant Walmart to sell its hair loss solutions in 20,000 retail locations.
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. The deal adds a seventh U.S. state to the Hims & Hers provider network and marks another way that Hims & Hers is integrating its spectrum of telehealth-based healthcare services across in-person and virtual care, company executives said.