Hims & Hers Health, Inc. (HIMS) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. I'm Craig Hettenbach. I cover the health care technology and provider space at Morgan Stanley. So very pleased to have Oluyemi Okupe, CFO of Hims & Hers. Just before we kick off, for research disclosures, you can find them at www.morganstanley.com/researchdisclosures.

So with that, Yemi, again, thanks for being here. I thought we could start maybe just kind of high-level strategy in terms of the last couple of years, how the platform has evolved and importantly, what your vision is for the next few years going forward?

Yes. No, perfect. It's a really great question, Craig. So I think initially, Hims & Hers started around really with a focus towards making treatment for stigmatized conditions accessible and elevating the awareness for consumers across those conditions. I think as you look at how the platform has evolved over recent years, we started to add many different capabilities that remain a key focus of the organization going forward. And so a few years ago, we made the introduction into personalized treatments really with an eye towards thinking through what are the different elements that prevent consumers beyond just awareness and access from getting treated, whether that's form factors or needing to balance side effect profiles with efficacy concerns or even just making regimens more simple through treating multiple conditions, whether it's relationship with our subscribers on our platform. We really leaned into that, invested hundreds of millions of dollars in CapEx to bring forth those facilities. And I think over time, what we saw is more and more success through retaining our core competency of elevating access awareness, but the need and the consumer feedback around personalized treatments was relatively resounding where the majority of consumers on our platform today now receive the benefit from personalized treatments. With more than 2.5 million subscribers on the journey, I think that we have the benefit, I think we're one of the few platforms that do have the benefit of really seeing the consumer life cycle from intent all the way through outcome. So what are the things that users are coming to us to treat? What are the treatments and dynamics that worked? What are the ones that potentially consumers did not have success with? And ultimately, what is the follow-on care that result in greater and greater success for consumers. And so as we think around the next phase of the company, I think the way that we've thought around building the capabilities for Hims & Hers in the past has really been through enabling a compounding effect of the benefits and capabilities of the platform. So we started with awareness and access, combine that with personalized treatments. Now what you're seeing with the scale of what we have is leveraging data and insights through the existing user journeys that we have today, but you're also seeing that morph into new data vectors in the form of live diagnostics and some of the other exciting things that we spoke around last year on this year's earnings call. And so I think what you're likely to see from us going forward is a strategy that still continues to leverage the historical competencies of the organization but leans more aggressively into the data. And so we speak around quite a bit around what are the key growth levers across the company that we believe will drive the business. That is deepening personalized treatments, continue to leverage technology to remove friction points at various stages through the consumer journey, leveraging partnerships across the ecosystem with like-minded players to deliver the things that we may not be able to deliver and then lean into international expansion as well with many of the things that we announced over the last several weeks.

Great. I definitely want to spend some time on the international strategy. But maybe just starting for kind of this year, you had earnings last week, you established guidance for this year. As you think through this year and the strategy moving forward, like what are some of the most important things you want to make sure you're executing on in 2026?

Yes. I think it's -- I think we made a ton of great progress across the levers that we spoke around in 2025. And so just kind of looking at the broadening of personalized treatments on the platform, that was something that we were very excited to do in 2025 with more multi-condition offerings across many of our more tenured specialties. I think as we looked at the investment that we made in the technology platform, one of the things that afforded us to do was the ability to move faster and more efficiently. And so if you look at the company's life cycle, historically, we launched 1, at most sometimes 2 specialties per year at the most. At the end of last year, we went into 3 very complicated specialties in the span of 6 months. And so I think that, that is a testament to the investment in the engineering and technology teams that we put forth in the front half of last year that enabled us to move faster. I think our ability to continue to cultivate those new specialties, low testosterone, menopausal support for women and diagnostics will be critical in setting the foundation for growth in 2026, but also the future growth vectors beyond 2026. And so I think that will remain an area that we lean into or continuing to cultivate and drive those new specialties. Additionally, what you're likely to see us do is continue to also really lean into the effect of pairing data capabilities with personalization. So we were excited to announce the YourBio acquisition last year that in the future will enable us to roll out a painless at-home diagnostic device. The ability to also pair that with some of the best minds in AI to really just elevate the consumer experience as well as the diagnostic capabilities on our platform is something that we're very excited by. I mean clearly a very meaningful investment in international expansion. I think that the aspiration for Hims & Hers has always been to help the world feel great through the power of better health, our mission statement. And so I think that in 2025, we embarked on that journey with the expansion into Canada, deepening our presence into the U.K. In the back half of this year, we're very excited to further reinforce that through welcoming the Eucalyptus acquisition to the Hims & Hers family.

Great. Just going back for a minute in terms of you laid out kind of how the platform has evolved. Just from an awareness perspective and maybe touch on just kind of Super Bowl ad, just -- how is that resonating? And anything you can kind of offer in terms of whether it's traffic to your site or kind of feedback loop around that?

Yes. I think that in the near term, what we've already kind of observed a lot of success with, it's just like the marketing efficiency. So a couple of years ago, we invested very aggressively in the brand. And I think that we're uniquely positioned for that in the respect that we have a broad set of capabilities and specialties that are still relatively focused in nature. And so roughly in the kind of back half of 2022 and definitely in 2023, we started to lean more on broader brand education. And you're seeing that show up in the form of an immense step-up of marketing efficiency in 2025, where we elevated marketing as a percentage of revenue, improved that close to 7 points year-over-year. And so I think that, that is an indication that, that is working for us. And so with the Super Bowl ad and some of the other things that we've put forth this year, our expectation is that we'll continue to invest in the brand. There's more capabilities. There's also the shift to help consumers more proactively improve and manage their health that we want to spend a lot of time educating consumers around and making that transition. So I think that our view is that the investment in the brand will carry long-term efficiency gains for us as an organization. And so when we think around like what is the North Star for Hims & Hers, call it, 3 to 5 years from now, I think it's to become the default brand for health and wellness. And so if you mentioned refreshment drinks or car insurance, each of those phrases triggers 2, maybe 3 brands that come to mind as a default brands that cater to those audiences. I think that we have the breadth and depth of treatments that position us to be the default brand for health and wellness services.

Great. I did want to touch on just the compounded pill and kind of the news flow around that in the last couple of weeks. And importantly, when you think about all the strategies and things that you're kind of gearing up to, how is the company kind of dealing with that in terms of litigation risk, FDA and DOJ? Any perspective there you could share with us?

Yes, sure. I think we're always thoughtful as we launch anything new on the platform, both from a regulatory perspective, but also from a consumer trust perspective. I think the strength of the brand is the ability to continuously adapt as well. And some of that is what you saw around some of the decisions that we made around the oral pill offering that we did launch. I think that our interest is always to put the consumers first, and we talk to a lot of experts internally and externally. And I think with that and continuing to follow the same frameworks that we have, I think we're confident in continuing to build a robust offering, not only in 2026, but also for the foreseeable future as well.

Got it. I'd like to come back to just some of the new growth initiatives, and you mentioned kind of low testosterone, HRT, menopause, like take us through kind of as you look and evaluate new categories, what's the most important kind of criteria for you to not just kind of target that, but then to kind of execute on some of these categories?

Yes. I think there's a few components before entering any new specialty that we look at. The first is around the category being recurring in nature. I think the focus of the platform thus far has been going after conditions that are recurring in chronic. So like what you don't see today on the platform are things that go after addressing acute needs. So that's usually one filter that we apply. The second is there needs to be a large enough addressable audience that really truly cares about these things for it to make it worthwhile to invest the resources to bring an offering to market. The last thing is that we look for things on the market today that fundamentally, people are going to increasingly care about, things that are emotionally resonant in nature. And so I think the pairing of those 3 things, large market, recurring in nature and emotionally resonant are things that historically have been what's drawn us to bring an offering or a given specialty to market. I think that what becomes exciting is as you also look around the capabilities that we've expanded upon with the personalized treatments, but also with the launch of the lab offering, you're able to detect things that are still emotionally resonant but the people may be not able to see. So traditionally, things like hair loss, weight loss, sexual health, those are things that you immediately know you have a challenge that you're faced with. For elements that may not be as obvious like low testosterone or hormonal therapy, those are things that you may not know exactly. You may fill some of the symptoms, but you don't necessarily know, hey, I need to go for XYZ treatment. The ability to make diagnostics more accessible to a broader portion of the population positions us to help users identify where they may be faced with those treatments that are less obvious, but ultimately have a ecosystem that serves those in an easier and friendlier way than what currently exists out there today.

Got it. And then how do you think about just the size of these potential markets longer term and think about as you kind of scale into it? I know they're kind of just getting off the ground this year. What does that look like in the next couple of years?

Yes, it's a great question. I think our view is in relatively short order. Each of these specialties has $1 billion -- has the ability to hit a $100 million plus run rate in the near future. I think from there, just like given the amount of individuals that are suffering in the U.S. alone, even setting aside now the global dynamics, these are markets that have tens of millions of users that are encountering challenges and can benefit from treatment. So our view is each of these have the ability to be quite large in nature. I think that as we continue to remove barriers and friction points in the ecosystem that prevent users from getting treatment today, the opportunity is immense. And so that's one of the things that gives us just the high degree of confidence in the ability to hit very ambitious 2030 targets, the $6.5 billion or more of revenue and the $1.3 billion of EBITDA.

Got it. And you mentioned before, really good strides on marketing efficiency. How do these new categories play into that when you think about kind of CAC and LTV? Is it a continuation? Are there some upfront investments required?

Yes. I think there's going to be upfront investment required. I think we're going to thoughtfully expand specialties in a thoughtful way as we've done in the past through stage gating and ultimately bringing each of these specialties to effectively what is the gold standard where we run the company at a 1-year payback period or less. I think what's very exciting is you see a lot of synergy value across many of these specialties, right? So we spoke around earlier the concept around how diagnostics moves you from a world of reactive care to proactive care. I think that's going to hold true more and more in the future. And so I think that the ability to invest in the broader brand plus the ability to proactively help consumers diagnose challenges with their health, ultimately will drive more and more marketing efficiency in the future because as we're able to identify, hey, you might have low testosterone and you take a lab test for that. The hurdle for that user to convince them to treatment with real data, that barrier becomes much lower, and they're already a subscriber on our platform. So it's a little bit of almost like why not, historically, we have not leaned heavily into cross-sell. But I think the ability to pair data from diagnostics and the future wearables and other forms with treatment unlocks an immense opportunity for us to continue to drive efficiency on the back half of the decade.

Got it. So it sounds like you have enough kind of in the hopper in terms of growth. But on a longer-term basis, any other categories? I know in the past, the company has talked about kind of sleep and pain management is interesting. How do you think about those specific categories or others, again, more on like a multiyear kind of basis.

Yes. I think on a multiyear basis, I think we have several specialties, many of the ones you mentioned, sleep, pain management and others that are incredibly exciting for us. I think that we oftentimes get feedback from users as well or subscribers on the platform. So I think we'll continue to be very thoughtful around the sequencing which go after the specialties. But I think that there's an immense amount of additional specialties. But again, I think that some of the insights that will come from our platform through diagnostics will help us more precisely refine the road map for the next couple of years.

Great. Do you want to pivot the international initiatives. You're putting a lot of capital to work there to kind of grow internationally. I guess before we dial into the specific deals. What are your thoughts in terms of just the why now in terms of the time to be doing this internationally? Is there anything about the markets or growth trajectory that this is the time to kind of execute on that?

Yes. I think that there's a couple of barriers or variables to this. I think the first is like the -- Hims has had an international footprint for several years. I think like similar to how we approach the launch of new specialties in a very thoughtful and disciplined way, that's very much our approach to international markets. So we've been present in the U.K. through the Honest Health acquisition for several years. We obtained a lot of great learnings from that. We then looked at the amount of free cash flow that the domestic business is able to generate in operating cash flow, where last year, we had north of $300 million. I think given some of the dynamics of the success that we saw progressively with ZAVA acquisition last year, that reinforced greater confidence that there's an opportunity to, through both organic as well as acquisitive means, become the leading global platform. And so I think that as we look at some of the more substantial acquisitions we made, namely in the form of Eucalyptus, that was several quarters in the making and we oftentimes just think through what are the various markets we want to enter. We do an honest assessment of build by partner. And then we go through and kind of hold various discussions with a variety of different industry participants. And what we observed with the team is that was one of the teams that was very culturally similar to Hims & Hers. They're very thoughtful, -- [indiscernible] system is very thoughtful in their expansion approach, also has the ability to be agile and move very quickly. That was something that excited us. The strength of the domestic free cash flow and operating cash flow that we're generating it was also something that was very, very exciting. And I think the ability to look at just the overall volatility in the market, like we tend to think more on a longer-term approach. A couple of years ago, the multiples for businesses look quite different between the attractive price point, the confidence that we got in the -- from the learnings in the U.K. market, as well as just the overall strength of the domestic business, like a good opportunity to further place another element to build the global platform for the business.

Got it. What would you say when you think about internationally, like the biggest differences to the U.S. kind of market? Like what are some maybe adjustments you have to make, whether it's in strategy or what matters most to ultimate success internationally?

Yes. I think it's like the -- I think probably -- I almost put the question unanswer, but I'd almost put the question and go into like what is fundamentally similar, right? And I think that that's probably the key element to the equation because I think there's nuances across each market that you kind of go into that vary. But fundamentally, at the end of the day, consumers want to feel great. Consumers want transparency. They want convenience. They want to feel heard by providers and they want effective treatments through many of the things that we offer such as whether it's personalization or just the provider connectivity. Those are things that always hold true. Like it's going to be in no market, do you have a consumer say, "Hey, I don't want to feel great or I don't want to improve my health or I want to pay more." There's just things that are fundamentally standard across the verticals. And so I think when we view it from that lens, that kind of is a North Star that we operate under. And I think across each market, there's nuances around regulatory mechanics, marketing mechanics and so forth. But I think they're just operating through principles of the things that are similar and how do you bring value across those dimensions. We typically start there, and I think that unlocks a wave of opportunity and then we go into, okay, how do you make that work within the construct of different regulatory standards, whether it's marketing or different regulatory standards around the products you're able to offer. But largely, we've observed that the model that we saw a lot of great success with in the U.S. and the value that our subscribers and the feedback they're benefiting from in the U.S., those benefits translate across borders. And that gives us the conviction to work through some of the regulatory standards and nuances on a market-by-market basis to bring those to consumers.

Got it. And I think you've talked about longer term, it could be kind of a $1 billion business. Today, it's dilutive to margins. Can you just talk about that dynamic in terms of as you ramp, like what does the margin curve look like? And what are some of the important categories for you to kind of get to that $1 billion run rate?

Sure. I would say that like the opportunity for international is immense. I think it's at least $1 billion in the next few years. I think when you look at the curve of the U.S., right, so if you rewind 5 or 6 years ago, the Hims U.S. business was not yet EBITDA profitable, not net income profitable. But as you started to follow a capital allocation framework that enables you to realize benefits from economies of scale, how do you hyper focus on how do you think through leveraging operational efficiency throughout the ecosystem over time, the combination of those 2 things enabled margin expansion fairly quickly where at the end of 2023, we had our first year of adjusted EBITDA profitability. The year after, we were profitable on a net income basis. Last year in 2025, the operating cash flow across the entire footprint was $300 million. These things tend to compound pretty quickly. I think our view is on a market-by-market basis, the international markets have the capability and the ability to do the same things. And so I think the benefit of being a global player is, we have the ability to invest in those markets accordingly to get them to meaningful scale. We have the expertise of having been through this through fee revs and specialties as well as in the U.S. to think through the construct that enables margin expansion in the future. But I think that as we start to look at what the international business looks like 3, 4, 5 -- 5 years out, I think the kind of the way that you saw the U.S. Arc increasing margins rapidly over time through leveraging benefits of the economies of scale. The international business has the ability to do that. I think the benefit that it gets is, it has -- U.S. operation has the ability to provide funding to make investments probably maybe on an even more aggressive time frame than what we were able to do in the U.S.

Got it. That makes sense. I wanted to go back to kind of the sexual health side of the business. Last year, you guys had talked about kind of a transition in that market. Just kind of where are we at there? And then that has been a headwind to growth. Is there a point you've kind of lapped that and you think growth will resume in that part of the market?

Yes. I think it's -- we disclosed last quarter overall, the Hims business growing north of 30% year-over-year. So we still see in aggregate, very robust growth levels there, the Hers side of the house growing in the triple digits. And so I think that for the sexual health transition, something we're going to be very thoughtful around. I think our expectation is that we'll start to get through that in the back half of this year. I think that a large part of it is at our discretion though, right? If we see newer specialties take hold and scale faster, there's the ability to be more aggressive with that transition. If the new specialties follow more of the conservative approach that we typically take, we have the ability to do the transition in a more muted way. And so I think that this will be something that we'll dynamically continue to monitor throughout the year. The effect of the sexual transition is getting smaller year-by-year as you see a greater and greater benefit from the stronger retention of the daily cohorts and also as our on-demand business becomes smaller in nature. I think it's going to be something that we expect to start to see the effects of that received in the back half of this year, but something that we're dynamically watching.

Got it. And that triple-digit growth on the Hers side, you guys have talked about $1 billion in revenue this year. Can you talk about just some of the key drivers there and importantly, just the durability of strength on the Hers side?

Yes. I think it's overall quite durable. I think you have specialties that have launched in the platform such as Hers dermatology that supports skin and as well as hair, mental health business historically and then the weight loss offering as well. Now with some of the newer specialties such as diagnostics and menopausal support, I think the combination of these things and the continued evolution to bring more and more offerings and improve the overall breadth of specialties on Hers gives us conviction that it will be on pace for the $1 billion this year as well as have opportunity in the future to continue to grow and scale.

Got it. Let's pivot just to technology and AI, and you guys have talked about kind of agents and would love to get a sense or just an update in terms of what investments you're making, what it kind of means for the platform today?

Yes, sure. I mean I think there's some things that are going to be increasingly visible to consumers, and there's also the things that just inherently help us move faster. So alluded to this kind of at the start of the discussion that we're having where our ability to launch 3 complicated specialties is just a testament to the overall strength of the technology team and how they're continuing to evolve the platform. I mean you're going to continue to see us move faster, both in terms of the consumer-facing things, the ability to get your lab insights, interface and engage with the provider. I think we will continue to evolve and become more dynamic over time. As we kind of play this out over a couple of years, I think there's kind of a few key phases where I think technology can really transform the experience for subscribers on our platform. Earlier in the journey, you kind of have the concept of like what happens with respect to how does the patient get diagnosed. So everything from the experience of when you come in, how does the overall experience for how you engage with the platform to seek treatment look like. There's a ton of opportunity to start to harmonize that and leverage technology for more customizable and seamless experiences. Then I think with the breadth of personalized offerings, there's the fundamental question of -- for a user, many users want to work with a provider to identify what is the most appropriate treatment for them and oftentimes, I find myself even doing this of asking like, well, why this treatment? The ability to start to equip with real stories, real data, real permutations with diagnostics, I think, is fundamentally a game changer. And when you also start to think around, historically, we've been able to see intent to outcome, which medications for certain segments of users retain on which ones did not, what side effect profiles the individuals bump into, you actually start to pair that now with like real quantitative outcomes from diagnostics, what improvements across which metrics of users see with treatments, showing that and demonstrating that to users over time, like that becomes a very powerful in-journey experience. And then as you start to go into the follow-on care, that also is an area that's ripe for opportunity as well. And so I think that users constantly come to the platform, wanting to engage and ask more questions for, well, how do I improve my care, XYZ question, particularly in our weight loss specialty, we see that users are wanting to utilize many different tools from instructions on the medication to also instructions around calorie counters, water intake, trackers and other tools, the ability to start to fold that dynamically into programmatic AI agents in the form of things like care coaches or nutritional coaches, that becomes very powerful. And as we look through the talent that we brought on, on the engineering team over the last year, I think we're very well positioned to start to bring that value across the ecosystem that we just talked through.

Got it. And how about MedMatch? Where does that fit in, in terms of where it stands today and into the overall strategy?

Yes. I think we're -- we still continue to be excited by MedMatch. I think that plays more into like that diagnostic experience that I mentioned of how do you fundamentally help providers and subscribers identify and [indiscernible] for the treatments that are best for them. I think just the introduction of more data in the form of diagnostics and in the future, wearables and other inputs that we'll get will fundamentally help tools like MedMatch and others in the overall diagnostic experience.

Got it. In addition, from the AI lens in terms of consumer experience that you walked through, anything internally in terms of efficiencies or things that you expect to be able to kind of scale even better going forward?

Yes. I think I just -- I think the example of having the architecture and the ability to move quickly to launch through complicated specialties, like I mean, in our history, that was just not something that we've done before. I think that's a reflection of the type of talent that we brought in that will enable us to move quicker. I think there's also going to be things on, obviously, the cost efficiency side of the house, whether that's through continuing to improve the customer support costs, but like not degrading the efficiency or the overall quality and experience that the user is able to get. So I think that there are going to be cost reduction efforts that -- across the organization that will present themselves. But I think what's more exciting, I think energizes myself and many other members of the team is just like what the overall expansion opportunity can look like and what that can provide from a revenue and margin profile perspective in the future.

Got it. No, that is because I know there's a lot of focus today around the margin side, but revenue opportunities could be very appealing. Just as we finish in the next couple of minutes, I do want to spend time on just vertical integration. And really in the context, if I think about what's a competitive market, you have large organizations like Amazon, you have a long tail of private telehealth companies. Just update us in terms of how powerful that's been from a verticalization perspective and how differentiated do you think that is versus other offerings out there?

Yes. I think it's a question that has kind of come up every -- in the last 4 years, every year that I've been here. And I think that we continue to execute strongly across kind of the 4 levers that I think differentiate Hims & Hers. And I think if it was just like one individual lever where it's like this is the secret sauce for why we're differentiated. I don't know that that's necessarily durable. But I think the fact that like we continue to execute across the 4 key levers. One is just the overall brand. I think consumers increasingly know both the Hims & Hers brands and are continuously drawn to those brands. I think that, that has been a historical differentiation factor for the organization. When you look at the technology and the benefits that we get from scale, north of 2.5 million subscribers on the platform, again, I think we're one of the few players in the entire health care ecosystem that goes from [indiscernible] all the way to outcomes, I think our ability to take that and adapt the offerings that we have on the platform has historically been a differentiating factor as well. I think as you start to inject more richer data, things like lab diagnostics, wearables and pair that with some of the AI capabilities that we talked around earlier, I think that ecosystem becomes more and more powerful. The personalized capabilities that we spend a lot of time speaking around, we've put hundreds of millions of dollars of CapEx over the last couple of years to build out those capabilities. And we have the data to know increasingly what are the things that are most interesting for our subscriber base at scale. I think the ability to execute on that has been immense. And I think the final component is really just like the strength and the quality of the provider network that we do have. I think being one of the largest players out there, our ability to attract and draw some of the best medical and provider talent truly has been differentiating. And so I think our ability to continue to execute across the levers that we mentioned on the growth side, but also to reinforce these components of the flywheel is what makes me super excited on a day-to-day basis, but also gives me the conviction that we'll continue to see the strong growth across not only domestically but internationally for the business as well.

Great. I think we're right on time there. So I appreciate the insights into the business, Yemi. Thanks for being with us.

Awesome. Thanks for having us.

Thank you.