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Hims & Hers CEO on portfolio expansion opportunities, company outlook

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman speak with Hims & Hers Co-founder & CEO Andrew Dudum about the company’s first earnings report since going public.

Video Transcript

- Hims & Hers is fresh off its first earnings report since going public in late January. The seller of sexual wellness and hair care products saw a sale 67% from a year ago, but did rack up a $5.2 million net loss. Joining us now is Hims & Hers co-founder, Andrew Dudum. Andrew, good to speak to you, again, here. How is the business trending so far this quarter? I mean, I was in my supermarkets this past weekend. I see a lot more people out. They appear to be spending their stimulus checks. How is the business different now compared to the last three months of last year?

ANDREW DUDUM: We feel really as good as ever for this business. We're seeing both the core at Hims categories which, as you mentioned, are things like sexual health and hair care as well as some of the new category investments on the Hers side, dermatology, mental health, all seeing really quite exciting acceleration.

And so it positioned really well. We raised forecasts this year really materially between $195 million and $205 million in just our fourth year of operation, which is quite a big step function raised from our last year guidance. So I'm feeling pretty excited for what this year has to come and Q1 ahead of us.

- You did call out this year adjusted operating losses to be $35 million to $45 million. That's a little higher than when we last talked to you. I believe you were at $30 million in January. What are you spending on this year?

ANDREW DUDUM: We're just seeing increased opportunities to invest. I think coming into this year, as we've diversified the portfolio for Hims & Hers, we're now offering over a dozen or two different types of products and conditions for different types of customers in need when it comes to their health care. And so as we expand that portfolio, we're seeing opportunities across channels-- paid social, Google, TV, radio, podcasts-- to deploy capital at really efficient returns on investment. And given the size of this market, we're talking about a $4 trillion health care market that really has yet to be innervated in and modernized for the consumer, we think it's really prudent to be investing those dollars.

And so we're actually really quite excited to be able to raise guidance on the spend side because it means that there's a lot of growth in front of us, and there's a lot of profit to be taken off the table here.

JULIE HYMAN: Andrew, it's Julie here. So in addition to investing in product, I'm curious about your marketing spend. Because I know in the fourth quarter, you talked about pulling back on ad spend because you were seeing ad rates go higher. How are you thinking about that throughout the year, promoting these new products? I still think of you guys and your edgy subway ads, although there aren't so many people on the subway anymore. So how are you're deploying it, and how much are you going to be planning to deploy?

ANDREW DUDUM: You know, we have a really unique take on marketing and acquisition, and I think it's a really durable advantage to the business, which is we have so many levers across these channels, we can move flexibly. And so what you saw in Q4 as outlier events such as the presidential election and a huge movement back to commerce for people to try to make their year right, spending on the holiday season, as those rates went up dramatically, we were able to move exceptionally quickly, reallocate some of those spend dollars to more strategic tailwind channels, such as brand marketing.

And throughout this year, you'll see the team be just as prudent, deploying where it makes sense, adjusting through channels where it makes sense. I think it's really a feature of our business, which is our ability to move capital very quickly across channels, across categories, and across customers. And to me, that's a really defensible part of this strategy, which is this diversified portfolio of dozens of different conditions and products for all of these consumers in the country.

- Now, Andrew, there's been so much focus. I feel as though you guys are on the hinge side of the product because that is what you launched at, a lot of people are familiar with you there. But you just mentioned Hers. What does that business look like? How much in sales are you projecting for this year, and what are you working with on the Hers side of the business?

ANDREW DUDUM: Yeah, on the Hers side, there's a huge amount of investment, and the women's market for health and wellness, as we know, is absolutely massive. So our focus is really on things like dermatology, hair care, mental health, anxiety and behavioral health issues. Last year, we launched a full psychiatric suite and just recently launched individual therapy, so anybody can come talk to a psychologist, talk to a therapist quickly and very affordably on the Hers platform.

And those categories are really showing robust acceleration. They're some of the fastest growing quarter over quarter categories in our business. That business on the Hers side doubled in revenue quarter over quarter in Q4. And so we're really putting a lot of time into that business and to invest in the brand awareness side of it because we believe in that opportunity really dramatically.

- I was in Target this past weekend, Andrew, and I stumbled upon your products for the first time inside of a Target down the yawning men's care product line. What other retailers are you in?

ANDREW DUDUM: The retailers are really excited about Hims & Hers. We've got a brand that is building trust with a young demographic. When you think about our customer, they really are representative of the future of the health and wellness space. They're people in their teens, in their 20s and their 30s. And these are people that don't have direct relationships with health care systems, with doctors, with providers.

They don't, in many situations, even know the name of their doctor. And so being able to build a deep relationship with these patients as the front door of the health care system, over the course of the next 5 and 10 years, as they scale as patients and as more conditions pop up where we can treat them, we think there's an incredible advantage.

And so on the retail side of the house, we really think of that investment as a very profitable billboard. We are in hundreds and hundreds of stores across the country and we'll be in more as the company continues to scale, and it's an ability for patients to see us in a lot of different places, not only online, but as they're browsing in their favorite retailers. And it's about building trust and building deep relationships with them as a partner to them, as their front door to the health care system.

JULIE HYMAN: Andrew, finally, I just quickly wanted to ask you about competition and where you guys stand now in terms of market share. You talk about the enormous market opportunity here, and this is really a nascent category, but you do have some competitors. You guys take a more buzzy approach versus some competitors that are more serious and medically focused, I think it's safe to say. So how do you guys stand in terms of market share and how are you thinking about competition?

ANDREW DUDUM: I think there's a tremendous amount of excitement in the health category, which is great. You're talking about a $4 trillion market in the United States. And as I've mentioned, this is a market. It's really the last multitrillion-dollar market in the country that has yet to be modernized with digital technology. And what I mean by that is, you can't pick up your phone, click a button, and get access to the full suite of health and wellness products like you can when it comes to food and transportation and clothing and commerce, generally.

And so over the next 5 and 10 years, there are going to be a lot of winners in this space, and we're excited to be a leader and a consolidator. I think for us, there's a few really durable advantages. One, you've got a unique brand that's going after this future generation-- millennials, Generation Z. When you think of the fact that the majority of the country is Generation Y or younger and they're quite young, you see the opportunity over the next 5 and 10 years to build deep relationships with them.

I think the other thing is, when you look at the diversification of the business and our ability to acquire different types of customers and monetize them directly, this is very different than traditional health care. We are one of the only businesses that are going directly towards the customer and monetizing that customer directly. We're not making money off back-channel referrals or making money off or trying to monetize you from an insurance company. We are providing direct access to you at very reasonable prices and real value that people are willing to pay for.

And I think that deep relationship with customers and their willingness to pay and our ability to monetize and build relationships with them I think is going to be an incredibly powerful, durable advantage. Over the next 5 and 10 years, as you said, more players come into this space and try to take a bite of it.

- Hims & Hers co-founder, Andrew Dudum, good to see you again. Good luck this quarter. We'll talk to you soon.