At some point in their lives, nearly 50% of men will experience hair loss due to stress, genetics, or hormone imbalance. Up to 40% of males over age 40 experience erectile dysfunction (ED). These are not insignificant problems and can be signs of deeper medical issues, yet they often go untreated: 60% of men report that they don't go to a doctor until they have symptoms that are too painful or acute to ignore.
There's an obvious need for a men's wellness service that's accessible, efficient, and discreet. Fortunately, there's a start-up in this niche with overwhelmingly positive reviews. Let's dig into the future of this start-up. Could it have an initial public offering (IPO) or be acquired in the next few years?
A disruptor in men's wellness treatments
The start-up is Hims, an internet pharmacy and telemedicine company that has made its goal to revolutionize men's wellness. Recently, the company received the endorsement of Snoop Dogg in raising awareness for men with sexual dysfunction.
Hims was founded by Jack Abraham and Andrew Dudum in 2017. The company aims to help men (and women, thanks to a new expansion) save time, money, and the potential embarrassment of a doctor's appointment by delivering health products to customers' doorsteps, with no shipping costs.
To sign up, consumers complete a medical profile on the company's website to get matched with a licensed physician on the Hims platform within minutes. After a consultation, users can proceed with a one-off purchase of a prescription drug, essential vitamin, or wellness product. Alternatively, they can purchase a monthly subscription. Hims offers mostly hair loss, ED, and skincare treatment products.
One of the company's major competitors is a healthcare start-up called Ro and its telemedicine service Roman. Roman offers a well-rounded, digital health clinic for men where patients can get products for ED, testosterone support, and hair loss treatments. Roman and Hims have similar pricing for their prescription services.
How much does Hims cost?
Hims' ED treatment offerings consist of various prescription drugs including Viagra and Cialis, which range from $30 to $425 per month for a supply of between five to 30 pills.
The company's hair loss treatments include generic hair loss drugs, shampoos, and vitamin gummies. These therapeutic options cost up to $33 per month. Hims' skincare products range from anti-aging creams to moisturizers that can cost up to $49 per month. In addition to the cost of the goods themselves, there's a $5 consultation fee.
In response to the COVID-19 pandemic, Hims is now offering at-home COVID-19 saliva test kits that are sent to a lab that provides results in three to five days. The test is authorized by the U.S. Food and Drug Administration (FDA) and it costs about $150. Additionally, the company is now offering primary care telemedicine and online therapy sessions on its platform, where one can perform a virtual visit with a physician. At $39 per visit, the service is competitively priced with Teladoc Health's (NYSE: TDOC) online consultations.
Lastly, Hims launched an expansion that caters to women in 2018 called Hers. Hers offers women's wellness products such as acne treatments, birth control, anti-aging cream, and hair products. Like Hims, Hers is competitively priced with prices being 50% to 80% lower than retail prices for certain products. However, unlike Hims, Hers does not currently accept insurance.
Is Hims worth it?
At first glance, many of Hims products may seem very costly. However, they are actually 75% cheaper than what consumers would obtain at an over-the-counter pharmacy, and 50% to 80% cheaper for certain branded wellness products. In addition, patients may be eligible for insurance reimbursement should they be prescribed a generic drug from Hims.
Speaking of generics, many of the company's products are off-patent versions of reputable branded drugs, with their efficacy and safety validated by the FDA. Furthermore, the company's medical team is fully licensed.
Will the company IPO soon?
With all its benefits, it should be no surprise Hims is gaining rapid consumer validation in the telemedicine sector. Since 2017, Hims has raised over $197 million from its investors. The company is currently at the series C of funding -- the venture capital stage at which a company will commonly decide to IPO or otherwise find an exit in the form of a buyout. Last year, the company brought in over $100 million in revenue, and this year, the company has set staggering revenue guidance of $250 million for 2020.
From its affordable wellness products to the licensed physicians on its platform, Hims is rapidly transforming telemedicine in the male wellness sector. Healthcare investors should definitely keep an eye out for Hims should it move toward an IPO.
Its current $1 billion valuation and unicorn start-up status are already keeping investors hyped up. Indeed, the company is worth more than $500 million than Ro, which is only at the series B stage of funding. With a male dysfunction market opportunity of just $2.9 billion, it seems like an environment favoring a winner-take-all scenario. Of course, Hims and Roman offer more than just ED solutions, so that diversification is a strength.
Could Hims be acquired?
With the company attaining unicorn start-up status in just a couple of years, there are many companies that may be interested in acquiring Hims. Johnson & Johnson owns hair loss treatment Rogaine and is in need of significant growth to its revenue. Other consumer goods companies, such as Procter & Gamble, and retail pharmacies like CVS Health and Walgreens Boots Alliance, are all potential acquirers of Hims or its competitors.
Ultimately, Hims is a high-growth telemedicine company that's rapidly disrupting the consumer health and wellness industry and is a company that IPO savvy investors should look out for in the next few years.
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Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool recommends CVS Health and Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.