Brand News
02 December 2022
Hims & Hers is a picture of DTC health, despite the economy
Bainbridge Growth breaks down a quarter that nearly doubled subscribers and saw record margin for the telehealth brand.

Bainbridge Growth breaks down a quarter that nearly doubled subscribers and saw record margin for the telehealth brand.
This post originally appeared on the blog of Bainbridge Growth. It is being republished by The Current with permission.
Him & Hers Health Inc. is a multi-specialty telehealth platform that sells branded products and services primarily via a D2C subscription model. The product assortment includes vitamins, supplements, over the counter medications and personal care products. Andrew Dudum started the company in 2017 as Hims Health, with sexual health products and hair loss treatments as it’s first products. The company launched Hers Health in 2018 as a separate brand and ecommerce platform that carried birth control options and libido boosters. With these brands established, the company raised a $100 million series C in January 2019 at a valuation of $1 billion. In January 2021, Hims & Hers Health premiered on the NYSE via a SPAC, Oaktree Acquisition Corporation. This liquidity event raised $280 million for the company, at a $1.6 billion market capitalization.
The company sells services including telemedicine consultations, with offers such as $39 primary care visits. Their products and services are paid for in cash, outside of the traditional health insurance network which speeds up access. Mr. Dudum sees the total addressable market of digital healthcare as $4 trillion, describing his vision as “access and a brand that people love and trust.” While HIMS is focused on DTC, the company also has B2B ambitions that include partnering with self-insured employers and health systems to sell their branded products and service subscriptions. Growth in revenue and subscribers hit an upward inflection point in 2021 and has been very impressive in the subsequent quarters.
Source: HIMS Q3 2022 Earnings Presentation
In the most recent quarter revenue was $145M, growing 95% YoY as subscribers nearly doubled to 991,000. Average order value outperformed inflation, expanding 12% while total orders grew 73%. These drivers are the primary metrics the company uses to track top line performance, with Orders Per Subscriber, Items Per Order, and Average Subscriber Length being secondary metrics that saw significant discussion on recent earnings calls. The management team pointed to longer average subscription times (more months purchased) and customers mixing toward higher priced products as primary drivers of increased AOV.
In Q3 2022 gross margin was their highest on record at 79%, with margin expansion coming from higher mix of online vs wholesale and increased scale in fulfillment operations. Gross margin has been extremely stable over the course of the last two years, with each quarter landing between 73.5% and 79%. Adjusted EBITDA in the quarter was -$6M and the company is forecasting its first quarter of Adj. EBITDA profit in Q4 2022. The standout in their expense base were the very high marketing costs as a percentage of revenue, typically averaging in the mid 50s and acts to offset their very high gross margins.
Source: hims & hers Investor Relations
While the company has forecasted ever higher sales throughout the year, increases to full year Adj.EBITDA projections have not occurred at the same rate. Impressive top line performance has undoubtedly been a good thing in this case, however the significant deviation from their initial February forecast does imply limited visibility on sales trends.
Source: hims & hers Investor Relations
The company’s growth pillars include Brand, Technology and Experience. Investments in these focus areas are stress tested using a robust investment framework where new initiatives must meet certain requirements:
1. Payback periods that are under 1 year.
2. Must drive long term growth while capturing improved unit economic benefits from increased scale.
3. Higher ROI if it is a long term investment.
On Brand, the company has pursued a similar pivot as other DTC companies, moving toward at scale brand awareness marketing. Their pursuit of high visibility and high impression brand placements is intended to drive long term brand equity. They’ve rolled out HIMS hair ads starring Rob Gronkowski during NFL Football games and HERS online video placements on Disney’s Hulu streaming platform. Their Technology investments have also been heavily touted by the executive team, as Q1 2022 saw the rollout of their iOS platform and during Q3 2022 their Android platform was released. Early responses to the Android app have been “extremely positive”. In addition to these mobile apps, they’ve pursued improved routing technology to support customer care questions. This system directs online customers to the right products and consultation offerings and creates the feel of a personalized platform.
Their Experience pillar has been focused on their new 25,000-square-foot owned pharmacy in Phoenix, where they are seeing significant gains in margins and customer experience performance by interacting directly with customers in person. Their broader national business is supported by the 300,000-square-foot Columbus, Ohio, fulfillment facility. The HERS product line has also been significantly expanded this year with 6 new Wellness Supplements and a skincare product line. Both of these new product lines are available at CVS Pharmacy, which is expected to drive growth in Wholesale Revenue.
Source: HIMS Q3 2022 Earnings Presentation
It is impressive to see their growth completely unaffected by recent macro trends, which was a point of repeated questions from Wall Street analysts on their most recent earnings call. The company is maintaining impressive growth and raising guidance as other consumer categories appear to be wavering. We believe that this is attributed to their unique subscription-based business model that solves a “high need” in a market (health) and their competitors like Teladoc are not exactly aligned to pose direct competition. Management seems to see benefits of scale playing out going forward and predicts Adj. EBITDA profitability will continue going forward. They intend to show a full picture of their steps to operating profitability during the Q4 earnings call. We’ll be watching for continued subscriber growth and leverage gains in marketing spend.
On the Move has the latest hiring update from The Vitamin Shoppe and At Home.
Heidi O’Neill has a new role at Nike. (Courtesy photo)
This week, Unilever, Nike and BigCommerce are seeing major transitions in the executive ranks. Meanwhile, The Vitamin Shoppe named a permanent CEO, and At Home brought on a longtime Walmart executive as president.
Conny Braams. (Courtesy photo)
Consumer goods giant Unilever announced key changes in top leadership roles. These include:
Graeme Pitkethly will retire as chief financial officer, effective at the end of May 2024. The board is set to launch a formal search for his successor. Pitkethly has been with Unilever for 21 years.
Conny Braams, who serves as chief digital and commercial officer, will leave the company, effective August 2023. Braams previously held senior management roles including Executive Vice President (EVP) of Middle Europe; and EVP Foodsolutions Asia, Africa and Middle East.
Craig Williams. (Courtesy photo)
Nike, Inc. announced several key leadership changes focused on consumer-led growth and marketplace. They are as follows:
Heidi O’Neill who is currently president of consumer and marketplace, will become president of consumer, product and brand.
Craig Williams, who is currently president of the Jordan Brand, will become president of geographies and marketplace at Nike, Inc.
Matthew Friend, EVP and Chief Financial Officer at NIKE, Inc., will expand responsibilities to include procurement, global places and services and demand and supply management.
Jared Carver will serve as CEO of Converse. Over the last four years, he served as VP/GM of North America for Converse.
Scott Uzzell, the previous CEO of Converse, transitioned to a new role as VP/GM, North America for Nike, Inc.
“These shifts will allow us to streamline our focus across product, brand storytelling and marketplace, mining deep consumer insights to deliver breakthrough innovation and engagement, while building long-term growth and profitability,” said Nike CEO John Donahoe, in a statement.
Lee Wright. (Courtesy photo)
Lee A. Wright was named CEO of The Vitamin Shoppe on a permanent basis, after serving as interim CEO since January 2023. Wright previously served as Chief Commercial Officer of Franchise Group and in executive roles at Conn’s.
Muriel Gonzalez was promoted to president of the retailer, after serving as EVP and chief merchandising and marketing officer of The Vitamin Shoppe since August 2020.
BigCommerce announced the following leadership roles:
Daniel Lentz was promoted to chief financial officer of BigCommerce, effective July 1. He previously served as SVP of finance and investor relations. Lentz will succeed CFO Robert Alvarez, who is retiring after a 12-year stint as CFO.
Chuck Cassidy was promoted to general counsel, effective June 2. Cassidy previously served as VP and associate general counsel. He will succeed Jeff Mengoli, who is retiring.
Hubert Ban was named chief accounting officer. He will replace Vice President of Accounting and Principal Accounting Officer Thomas Aylor, who departed the ecommerce platform on May 19.
Jeff Evans. (Courtesy photo)
Jeff Evans was named president and chief merchandising officer of At Home, the home goods retailer.
Evans previously served as EVP of entertainment, toys and seasonal at Walmart, managing the largest general merchandise business for the retailer. He rose to the position after serving in executive roles at Walmart US and Sam’s Club.