Telehealth, vaccines, and the growth of the digital era; is Hims & Hers a good investment right now, or is it merely another passing trend?
With specialties in over-the-counter drugs as well as prescription products, Hims & Hers Health Inc. (NYSE: HIMS) is well-known for tackling sexual health issues, as well as personal care such as hair loss and skin treatments. It does all this as a telehealth company, which, like other companies that provide digital and remote healthcare, has seen a surge in popularity over the last year as many people have avoided physically going to their physician.
But, with vaccine numbers on the rise and the hope for social distancing to be eased, we ask if Hims & Hers is a good investment right now.
Bull case
Hims & Hers Health Inc. seems to be doing quite well in terms of its financials. In its most recent quarter, the telehealth company made $52.3 million which is a 74% increase year-over-year (YoY). Its gross margin was also up at 77% for the quarter compared to 69% in the same period last year. For the full year of 2021, Hims & Hers has predicted revenue between $221 million - $227 million.
The company also recorded an 80% increase YoY in its subscriptions, coming in at 391,000. This is a brilliant leap that Hims & Hers will hopefully continue to grow moving forward. The recent announcement that pop-culture icon Miley Cyrus will be working with the 'Hers' segment of the business on a collection of prescription skincare products will certainly help bring in more clients. Although, only an advisory role, many of the singer's fans will be eager to subscribe once the marketing campaigns are up and running.
The pandemic definitely gave this company a tailwind whilst its high margin subscription-based business model gives the company room for growth. Although it is a telehealth company, its multispeciality means that it has plenty of diversification in its products. But, now the company is expanding geographically as it has put forward plans to acquire the London-based company Honest Health. This will bring more opportunities for growth on a global level, particularly in the business of hair loss products which is a popular and growing market across the world.
Hims & Hers, therefore, does have a decent growth runway. This is particularly important as many now acknowledge that telehealth is an industry that is here to stay. In 2019 only 11% of consumers used telehealth services according to a study by McKinsey. But, by 2020, up to 46% used a telehealth service instead of physical doctor's appointments and 76% of them have said they will stick with this method of healthcare post-pandemic. These are good statistics that show that the telehealth industry and thus, Hims & Hers, has plenty of room for growth.
Bear case
Even though this is an industry that has only just seen serious growth, the idea of telehealth has been around for a while and as such there are a good few companies competing for market share. Whilst there are some which have niche specializations such as Favor's contraceptive healthcare, there are others that provide larger multi-specialty packages. With Teladoc and American Well being the biggest names currently, Hims & Hers Health might find it difficult to establish a large market share.
So, is Hims & Hers a good investment right now?
Hims & Hers is a good investment, it has plenty of potential with growing subscriber numbers and revenue. In addition, it is currently showcasing its plans to expand on a global level with its acquisition of London-based Honest Health. Miley Cyrus joining the team will only serve to increase its exposure to younger age groups. Plus, the idea of telehealth as a new way to carry out healthcare seems like it is here to stay.
This stock is a good investment right now and it seems like it will continue to be so in the future.
Quickfire round
- Can you buy Hims & Hers products in physical stores?
Yes, you can find Hims & Hers products in Target stores across the U.S. as well as online at Target.com
Hims & Hers went public in a $1.6 Billion SPAC deal in January this year. However, the CEO and co-founder is Andrew Dudum.
- Are the Hims & Hers products FDA approved?
The company is an accredited pharmacy that only dispenses FDA-approved medications for everything from acne and hair loss to erectile dysfunction.
