Democratizing Access to Health Care with Hims and Hers

In this episode of TD Cowen’s Retail Visionaries Podcast Series, Andrew Dudum, CEO & Founder of Hims & Hers Health Inc., speaks with Jonna Kim, Vice President, Apparel, Footwear & Textiles Retailing/Specialty Store Research. They discuss Hims and Hers evolution as a lifestyle brand and innovation across various categories. They also discuss  growth opportunities at the forefront of the consumerization of health and wellness.

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Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Jonna Kim:

Hello and welcome to our Retail and Luxury Visionary podcast series. I’m Jonna Kim, Cowen retail analyst. Today we’re excited to speak with Andrew Dudum, CEO and co-founder of Hims & Hers, which is disrupting the healthcare industry by providing a 100% online telehealth platform that connects patients to licensed healthcare professionals in 50 states. Hims & Hers has a differentiated business model that makes health and wellness more accessible and affordable, powered by digitally native, fully verticalized end-to-end experience. Andrew, thanks for joining us today.

Andrew Dudum:

Yeah, Jonna thank you so much for having me.

Jonna Kim:

Could you talk about your core competencies and what makes your brand stand out?

Andrew Dudum:

So at Hims & Hers the mission and the vision of what we’re going after is really quite simple, which is to connect to everyday people, people like us across our Hims & Hers brands with incredible personalized health and wellness services. And so what that means is educating people about conditions that are common, de-stigmatizing those conditions, connecting those people with experts and specialists in their state that are licensed, and then also getting them personalized and custom prescription medication treatments that are perfect and made for them for whatever issue they might be dealing with and getting that delivered to their door. All of that for a very, very low cost and in a beautiful and seamless way.

It’s really this consumerization of the healthcare system. It’s the largest industry in the country that is yet to be modernized in a consumer first way. And so we are building a consumer brand around wellness and then building the technology and experience and capabilities to actually help get people true personalized medicine and healthcare delivered to their door in a way that they love.

Jonna Kim:

Thanks Andrew. Could you also talk about the opportunities you see to further develop both Hims & Hers and drive loyalty and engagement among consumers?

Andrew Dudum:

There’s three things that we really focus on, which is the brand and the relationships customers have with the brand, the innovation on the technology and capability side, and then ultimately the consumer experience and making that world class. And I think across all three we really believe there’s incredible opportunity to keep deepening that relationship with people, everyday people.

When you think about healthcare in this country, you don’t think about lifestyle brands, you don’t think about consumer brands, you don’t think about something that people love. In fact, the healthcare industry has one of the lowest NPS scores of any industry in the country, yet it’s the largest industry in the country that is yet to be disrupted. And so the ability to build a brand that is authentic, that people trust, that talks to them in normal ways, that gets them medicines that are really effective and that are personalized, but also medicines that taste good and smell good and that they’re proud of having on their kitchen counter or in their bathroom, something that feels and looks luxury and feels like you’re treating yourself. But the reality of it is it actually has real medicine in it. It’s those types of things that I think we get really excited about because it’s those types of things that I think are going to encourage people to take that first step in getting the care they need for whatever issue they might be struggling with.

Jonna Kim:

One of the big themes that we see in consumer is this intersection of healthcare and consumer, so we call it the consumerization of healthcare, and you’re clearly at the forefront of this emerging theme. What are you seeing in terms of this intersection of two sectors and how do you think about the market growth opportunity ahead?

Andrew Dudum:

I think it’s an incredible opportunity. I think frankly, the consumerization of healthcare is probably the largest value creation opportunity in the next decade. I really fundamentally believe that. I think it’s why you see so many people excited and just waiting for something to happen in this front, right? It’s an industry in healthcare that all of us use, all of us interact with, but it is slow and it’s sterile and it’s expensive. And it turns out when you look at the young people, people in their teens, 20 and 30s, they just don’t even engage with it at all. Despite the fact that they have insurance, they’re not going to a doctor regularly. They don’t have a physician who they know the name of, who they can call if something’s wrong. They’re just choosing to stay away from it. It’s because it’s not been built in a way that this modern customer really expects. It’s not mobile friendly. It’s not on demand. It’s not price transparent. It’s not beautiful. It’s not seamless. It’s not easy. So I think all of those things are the things we are bringing with Hims & Hers. We’re bringing a consumer brand that people love and trust and the technologies and seamlessness that they expect from Amazon or Uber or do DoorDash or anything online, and bringing that to healthcare and wellness in a way that I think really hasn’t been done before.

Jonna Kim:

Yeah, it seems like the opportunity is quite exciting. And this morning you announced a key leadership appointment and naming pharmacy veteran Dr. Scott as your company’s first ever chief pharmacy and innovation officer. Could you just talk about the decision to create this role and what is the significance of this leadership appointment for the company as a whole?

Andrew Dudum:

Yeah, this is a really important day and important role for us, and Dr. Scott is one of the most veteran pharmacy innovators in the country. He was the president and CEO of the American Pharmacies Association. He was also the chief pharmacy officer of the Cleveland Clinic for nearly a decade, overseeing all of their global pharmacy compounding innovation initiatives. We believe that our pharmacy and our technology capabilities from a medical standpoint will actually be able to deliver really, really innovative consumer products that are not available anywhere else. And this is something we hold to as kind of a real truth for us.

We believe the future of medicine is personalized. We believe that you as a consumer should come to a platform and your specific situation should dictate the specific type of treatment. Maybe you prefer a mint instead of a pill that you swallow. Maybe you prefer a spray instead of a serum that drips on your forehead. Maybe you prefer that it also adds the Lipitor in so that you don’t have to take two pills every morning. It’s a combination treatment for the things that you’re dealing with in combination. That type of innovation from a pharmacy standpoint really has never been done for the normal person. These are things that for the most part are only available to a very small group of individuals who are spending a lot of money. Most of the time it’s in places like Beverly Hills where this stuff is available.

I think it’s our vision to be able to take the absolute best of innovation in medicine, the best of personalization in medicine, and bring that to the masses at very affordable prices. Dr. Scott Knoer is a real specialist when it comes to overseeing innovation in pharmacy, and he’s built the largest ones in the country and he is joined us to help lead that innovation strategy for us as we continue to push the boundaries to get customers more and more proprietary products that really they can only get from Hims & Hers.

Jonna Kim:

Who are your core consumers and what are some unique characteristics that you see with your customer base? And how have your retention rates been trending among your core customer group?

Andrew Dudum:

It’s a unique brand because across Hims & Hers, we have the widest segment of customers I’ve ever seen from a consumer brand. We have 17-year-old girls struggling with hormonal acne on the Hers platform. We’ve got 35-year-old women suffering from postpartum hair loss and depression, and then we’ve got women in their 50s and 60s suffering from menopause. And so the full range of customer on the Her side, same with on the Him side, is apparent in our brand.

I think it’s because the brand and the core message is really about de-stigmatizing, whatever it is we’re dealing with and getting great care in a beautiful, seamless, beloved experience. And that resonates, I think, with everybody in this country, as we’ve talked about, given the healthcare dynamic, everybody is looking for something better and something different. So it’s a really unique brand because men and women of all ages really rely on it and love it, and that’s really represented in the revenue of the business. The business is made up of a lot of completely different customer segments buying completely different treatment packs, talking to totally different doctors about totally different things, but all of that is layered on top of itself to have a really robust and defensible business. And so that’s I think really one of the special parts.

Jonna Kim:

In another part of your core competencies, data and personalization, how do you leverage customer data across your business from innovation to fulfillment? And are there opportunities to further capitalize on data to create efficiency and improve the customer experience?

Andrew Dudum:

I think one of the beautiful parts about building a consumer first and technology first healthcare company is that data is at the core of everything we do. Being able to connect you as a customer with the right physician who’s licensed in your state quickly, it’s all data and technology that pulls that off. And so instead of waiting three or four weeks for a dermatologist or maybe even three or four months for a psychiatrist, we’re connecting you hopefully within an hour. Really, really fast. Same day treatment. Same thing from a technology and data standpoint of getting new products delivered to your door fast. Instead of waiting a week, we try to get it there within a couple of days.

I think the other thing where data is a huge strategy for us is when it comes down to the innovation, like we talked about around personalized products. Our ability to mine anonymously millions of data points to understand that you as an individual have these type of characteristics and the 100 or 200,000 people who have come through the platform that have similar characteristics really benefited from this type of medicine at this type of dose with this type of adjustment and that’s what led to the best outcome. That type of data when fed through ML and AI dynamics allows us to better prescribe on the platform intelligently.

So instead of Hims & Hers just being a beautiful brand that you love and trust for great health and wellness products, you can also say that at Hims & Hers you’re getting the best treatment to. You’re getting personalized treatment that you can’t get anywhere else, and the recommendation for which treatment you should try is proprietary to us as a platform. It’s better than you just going and seeing a psychiatrist individually because our psychiatrists are informed by millions of data points of patients like you. I think that’s a really powerful dynamic in healthcare that is yet to be realized that I think we can lead, which is his ability to aggregate the intelligence of the best physicians in the country, and then aggregate the data of millions of customers in the country that are getting treated to identify how we best personalize the care plan for your specific needs and give you the best shot of seeing improvement with the lowest shot of any type of symptoms from a side effects standpoint. That is the game and I think data is a huge part of making that possible.

Jonna Kim:

And I want to shift our discussion into innovation and R&D, I’m sure that’s one of the most important part of your business. How do you think about the new product offerings and how many categories do you expect to enter each year? And you talked about your proprietary products, what is the opportunity for that and where do you see the mix going forward as you think about the long term?

Andrew Dudum:

Yeah, we really believe that proprietary products is a huge part of the future of Hims & Hers. And I think in the coming years we’ll become the majority of products and treatments that patients are utilizing on the platform. It’s just better medicine. It’s better medicine. It’s medicine that’s made for you that is taking in your considerations, your concerns, your personal background, and adjusting it in a way that’s really custom. And this is I think the way medicine should have been done, but it’s hard and it’s expensive to do. And that’s what we’re trying to figure out. How do you do that at scale at a very affordable price?

I think in the coming years, the majority of the business will be these proprietary products and these types of innovative products in a way that you know, truly will be able to access something on the Hims & Hers platform that you can’t get in any other pharmacy or any other healthcare system in the country. And that’s something that we believe really strongly in, and I think it’s our skillset of and combination of healthcare and pharmacy excellence, like the higher we announced today with the chief pharmacy and innovation hire, that excellence combined with our consumer design, customer insights, the traditional skillsets of a consumer brand and a lifestyle brand are strength on that side. The ability to put those two together, I think it’s going to be really powerful when it comes to the innovation pipeline. So we’re working on a lot of products. I think you can expect quite a few next year to come out. And like I said, I think we’ll become the majority of the business as we progress in the coming years.

Jonna Kim:

It’s very exciting. And obviously you have the Him side, but also Her side and would love to shift our conversation to that. What are you doing to build that part of the business and what is the right long-term mix for the business as you think about Her side?

Andrew Dudum:

We shared it at the last quarterly earnings that we have now three or four different business lines that are growing mid-triple digits year over year, and some even growing four digits year over year. And a lot of that we’ve shared is on Her side. It is an exceptionally fast growing part of the business. Some of the fastest growing parts are coming out of that business line. And we are investing more dollars today in the growth of that business than we ever have in the company’s life, and that’s because it’s working, it’s working really well. And so long term, I think there’s a chance that Hers will make a run at superseding the Hims business if it keeps up on this pace. It’s a massive market. I think women are traditionally wildly underserved in healthcare. You have conditions like menopause or postpartum depression that go completely ignored by the traditional healthcare system. And so I think there’s a lot of demand, there’s a lot of people suffering in silence, a lot of people that know there’s something wrong but don’t have an outlet or a way to get treated. So I think there’s a really big opportunity for us to expand that Hers brand and I think over time it’ll likely be the same size, if not bigger than Hims.

Jonna Kim:

Great. And one last question for you. What are some underappreciated aspects of the business you think, and what is next for Hims & Hers?

Andrew Dudum:

One of the things I think is most underappreciated is the scale of this opportunity. We’re a relatively young, disruptive company. The company is just four or five years old. Guidance is over half a billion in revenue this year. So it’s fast. It’s growing very, very fast, but it’s still young. And I think most people in healthcare and the digitization of healthcare and the consumerization of it, I think a lot of people also really struggle with the fact that this model is a disruption on the payment model. The Hims & Hers platform is a really simple cash pay model. People are paying $30 or $40 a month to get access to this. And it’s an incredible value for people, and they’re not even using insurance. So people, I think, really struggle with the fact that it’s cash pay, that it’s not insurance dynamics. But when you really look under the hood, it’s so broken today in traditional healthcare where the majority of customers are on high deductible insurance plans, having to pay thousands of dollars a year in cash out of pocket. It’s no surprise that people are starting to use cash instead and just going to a service like Hims & Hers that they love better and is something that they have an affinity towards.

So I think those types of dynamics are still very much misunderstood, and I think more people will come to understand the scale of the opportunity as growth continues and as more customers really prove that this is what they want. So the things that we’ll be continuing to focus on are the three buckets that I’ve hit on. The brand and building deeper relationships with our customers, more trusted conversations with them. The second is our technology innovation, the innovation that lets you talk to a doctor quickly and seamlessly on demand. And then also the proprietary products that makes sure that you’re getting something that’s really personalized for you in your specific condition. And then lastly, the seamlessness of the experience, making it fast, affordable, efficient, and beautiful. Those are the three core initiatives. I think there’s a long way many, many years ahead of us, we’re in the earliest phases of building this company that will make a really big impact in customers and ultimately what we can build here.

Jonna Kim:

Thank you so much Andrew, for joining us today, and congratulations on all your success, and we are very excited about what’s ahead of Hims & Hers.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of Cowen Insights.

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