All right, good morning everyone. Thank you all for joining us today. I'm Maria Ripps, Internet Analyst here at Canaccord, and it's my pleasure to introduce Yemi Okupe, Hims CFO . Yemi, thank you so much for joining us today.
Thanks, Maria. Really glad to be here.
Perfect. To start off, you just reported strong results last week. Congrats, it was great to see the continued upgrade in momentum. Maybe talk to us about sort of how your strategy has evolved over the past couple of years, and what do you see as the most important strategic priorities going forward?
That's a great question. I think while our capabilities have evolved over the last few years, the strategy has not. I think our strategy really is around how do you leverage technology to effectively make the healthcare experience for consumers better. I think that's been the principle. Initially, we started out with awareness, access, affordability, and since then the capabilities that we've brought to the platform have really started to expand. This is not necessarily something that's just new to healthcare. When you look at how technology has brought that principle to other consumer experiences, Uber being able to democratize black car service, Netflix being able to create customized content from the comfort of your own home, Amazon making on-demand delivery more of a reality for consumers.
That concept of how do you take friction points that are preventing consumers from having an enjoyable experience, remove them, has been something that several other companies across the technology space have gone through, and at Hims we're on a very similar journey. When you look at how our platform has evolved over the last several years, the ability to shorten the timeframe that it takes a patient to get to a medical expert from weeks to potentially months in a brick-and-mortar setting to on our platform, oftentimes less than 24 hours. The ability to leverage that data and remove friction points for things such as side effects or enabling consumers to have alternative form factors or the ability to even have multiple treatments combined into one solution.
As we look to the future, as we bring on capabilities such as lab diagnostics that enable more data, the ability to truly refine those treatments as well as bring and unlock other value for our consumers is something that we're very excited by. We're going to keep continuing to execute on our strategy of democratizing services that have been available for few to a broad base of consumers, but expanding upon the capabilities that we leverage to do so.
Yeah, that's a great overview. Maybe let's dive a little bit deeper into personalization. Over the past several months, you acquired three companies and you've stepped up your CapEx investments. Maybe talk about how these investments enable you to offer a wider range of personalized solutions.
Yeah, it's a really good question. I think when we embarked on personalization, we had the benefit of getting a feedback loop from our customers. It was fairly insightful, but at the same time, it was just basic principles around what were the things that they were encountering if they did not adhere as a result of a certain form factor or they were encountering side effects that were too onerous as a result of the medication strength. That was all feedback that we were getting. As we look at the scale of the platform now with more than 2.4 million subscribers on the platform, we really believe that we have the ability to take that to the next level. A lot of the CapEx investment that we are embarking on is really going towards two key tenets.
One is enabling us to get more insights across what are the elements that consumers are encountering, as well as deliver those insights back to our customers. The second element is the ability to act upon those. When you think around things that lab testing unlocks, the ability for consumers to discover if they have a certain vitamin deficiency or if they have conditions that they didn't know that they even had. For me, for instance, I'm a relatively healthy individual, have done numerous medical tests, uploaded into ChatGPT, and I found, oh, I have not high cholesterol, but for my pre-genetic disposition, I have higher cholesterol than I should have. That's something that I would not have known without the lab tests. When you go through that experience, it's like, where do you go from there?
I found myself on the internet, ChatGPT, and other sources, doing hours of research. Didn't want to go on a statin, but what's the in-between? What are the supplements that you can take and so forth? It has the ability to actually probably do the lab diagnostics very shortly for consumers, but remove that friction for folks that are not going to want to do hours of research to have the trade-offs, connect them with a medical provider, and get them to treatment for conditions that they may not have known that they even had. When we look around what the future can be with a combination of data acquisition, but then also treatment enablement, that's something that we're very excited by and believe that we're uniquely positioned to help consumers optimize their health around.
Great. Maybe expanding a little bit on that point, can you maybe talk about how you're leveraging AI to enhance customer journeys, starting from intake and recommendation all the way through sort of care and support?
Yeah, I think we have been on the pioneers of that, both on the provider side as well as the consumer side. On the provider side, we'll maybe start there and then go into the consumer side. We, from the beginning, have looked to leverage technology to remove friction from providers' experiences to enable them to focus on treating the patients. Things that providers spend a lot of time on in brick-and-mortar settings, administrative tasks such as taking notes on their patients or if they hand off a patient, needing to read through those notes and identify what are the most critical components. On Hims and platforms for the last couple of years, we've actually automated many of those features. We flag risk levels and notifications for the provider community to enable them to focus on treatment of the customer.
As we look at the customer journey and how AI revolutionizes it today, we'll start there and go into what could this look like as we progress over the next couple of years. We've already made a lot of great strides through our MedMatch by Hims product, which is more of a diagnostic tool that effectively looks at the consumer attributes and helps providers optimize around what is the treatment, dosage strength, multi-condition treatments that's most likely to be successful for them. As you look at around the additional information that we'll get from things like lab diagnostic data around those consumers, and potentially in the future wearables, that enriches that data set in a way that will enable us to fundamentally treat consumers at a different level. We recently hired Mo Elshenawy.
The question was like, why would you bring someone that was focused on self-driving cars into a healthcare company? I think that there's actually a lot of overlap there. When you really look deeper around what is it that we're trying to go after, the ability for Mo has a lot of experience around navigating the need to make life and death decisions real time on a daily basis, the need to navigate complex regulatory requirements. I think that those are all characteristics as we look around enabling things in the future for consumers such as like an AI nutritional coach or chatbots for mental health. There's so much that we can do that we're very excited by. I think our platform really has the ability to pave the way for the future there.
Great. Let's talk about new treatments next. Last week, you reiterated your plans to launch low testosterone and menopause treatments sometime soon. How should investors think about the addressable market opportunity for those verticals? Are they comparable to the sexual health and hair loss verticals?
Yeah, I think that both of those markets are quite large. I think that particularly on the menopausal support are also quite underserved. We saw the ability to unlock a market when we went into Hers hair loss prevention. I think it's something that we are very excited by. One of the things that we've observed across all of our markets is oftentimes there's the market of consumers that's getting treated today, but there's a much bigger opportunity, which is the market of consumers that are suffering but may not be getting treated today or may not even know that they're suffering from the condition. As we look at some of the other capabilities that we are inherently bringing onto the platform, such as lab diagnostics, as in men, you might just feel like, hey, I'm tired. You may not know that you even have low testosterone.
The ability to proactively test folks for that can help with that discovery. The ability to offer treatment in the future is something that we view as a mechanism that can actually expand the market for people that effectively are willing to get treated for those conditions.
Are there any other sort of treatments in your pipeline that you can talk about that investors could expect next year?
I think we don't necessarily think on like a just an annual horizon. When we look over the next couple of years, I think there's numerous different ways and directions that the platform can take. We do see the deepening of personalization becoming something that is going to be a very significant opportunity in the form of helping consumers address things like vitamin deficiencies and things of the sort that we spoke around a little bit earlier. I think there's also the concept around just living a healthier, better life, whether that's in the form of longevity or health optimization. I think that that's something that's available to a very small demographic today.
The ability to democratize that principle of, I don't think if you talk to anyone out there, irrespective of your socioeconomic group, that you're going to want to say that you don't want to live longer or healthier. Our ability to remove those friction points and make that easier and more accessible for a broader population is something that we view will have an immense opportunity. That can take the form of many different things, such as metabolic support. We're already in weight loss, hormonal therapy support. When we kind of view like what category we're going to enter next, it's a debate that we have across the executive team. The lines are going to blur, but I think when we really look at what we're going after, it's going to be how do we help consumers optimize their holistic health.
I think through the data that we have, as well as the personalized treatments, that's going to enable us to go into a wider range of treatments.
Let's switch gears and talk about your weight loss segment. Now that commercially available doses of semaglutide are no longer offered on the platform, how should we think about sort of the growth profile of that part of the business?
Yeah, I think that we view the weight loss specialty as a key component for the overall story around Hims & Hers . It's not the only component. I think it receives a lot of attention, particularly the GLP-1s. The vast majority of the revenue is still coming from outside of our weight loss specialty. If you kind of step back and you look at just in the U.S. alone, the number of individuals that are suffering with weight loss-related challenges, I believe it's over 100 million. In aggregate across all different specialties that we have across Hims, we have 2.4 million or just north of 2.4 million subscribers on our platform. The runway there is quite long and large.
I think that what we do observe is while there's a lot of discussion around specific treatments around GLP-1 types versus oral, what we see from consumers coming to our platform is the vast majority of consumers are suffering from a weight loss challenge and they want to lose weight. They're looking for someone to help them through that journey. The right journey is going to vary from consumer to consumer. Our platform, in the form of its data, as well as the provider expertise and the breadth of treatments that we have, enable us to capture a wide array of that market. We believe that from not just selling the medication, but also selling the ability to engage and interact with that provider alongside your journey, particularly for GLP-1 treatments, is a differentiating factor.
I think we publicly disclosed the stats that within the first three to five months, patients are contacting a provider almost five times over the course of that journey. If you think around the ability to do that in a brick-and-mortar setting, that would be incredibly difficult. What we view on our platform is the ability to bring value to consumers beyond the medication. As we package that holistic treatment that a small portion of this population gets today and democratize that, we think that there's a very long runway for weight as well as our other specialties following those principles.
Got it. Maybe just sort of sticking here with the short-term impact on the platform from changes to Zepbound, is there anything you can share in terms of what portion of subscribers who were on commercially available doses kind of remain on the platform either by personalized semaglutide or other treatments?
I think that from our vantage point, we in the second quarter opted to rotate those folks off other platforms. It's very uncommon for an individual to have been eligible for a commercially available dose to come back and all of a sudden switch to a personalized dose. We do see a portion that have gone to the oral weight loss offering or some of the others that they were eligible for, such as liraglutide, to retain some of those benefits that we spoke around earlier. I think there was some noise in Q2 with the collaboration as well where some folks opted to move to the branded medications that were on the commercially available dosages.
We see folks migrate to a variety of different treatments, but the general theme that we do see there for the folks that have opted to stay on is the value that they get beyond the medication, the app-based tools, the provider interaction, and other elements that we do see consumers really value.
Got it. Yemi, I think some investors sort of remain concerned about the regulatory risk associated with continuing to compound semaglutide, especially in light of the Novo Nordisk partnership ending and then Novo Nordisk filing a lawsuit against several compounders last week. I know you and the rest of the management team have been very clear on this legality and precedence for compounding, but is there anything else you would like to add for our audience to address that?
Yeah, I mean, I think I would say that compounding is not necessarily new. I think that the shortage received quite a great deal of attention as a result of that. I think that the laws and regulations are pretty clear. This is something that's been around for a decade plus. I think that the beauty of our platform too is that we actually have the data from our consumers around the side effects that they encountered and how we've been able to mitigate those side effects for a portion of our consumer base. I think we're doing it safely as well as responsibly. From our vantage point, the ability to also be public with that data around what are some of the consumer journeys and what they're seeing, we believe, makes it even more transparent and apparent around the benefits that we are bringing.
I think we're also not necessarily mass producing it. When we look at the aggregate number of folks on our platform relative to those that are suffering from weight loss, it's still a relatively small percentage of the population that's receiving the benefit.
Great. That's helpful. Maybe to round out our discussion on weight loss before we move on to other topics, can you maybe talk about your oral weight loss solutions and what kind of trends you're seeing there?
Yeah, I think that we see very strong trends in the oral weight loss business. I think there's a few reasons behind that. I kind of alluded to this a bit earlier. When consumers come to us, to the platform, oftentimes they're not seeking a specific medication. They're seeking help for a condition. I think that the reality is, needles, irrespective of any form factor, are scary for a great deal of the population, myself included. We also do see that the requirements for the oral weight loss medication are fundamentally different than the GLP-1 population. You don't need minimum BMI standards or comorbidities. The breadth of eligibility for the oral weight loss business is much broader. It's at a different price point. I think that what we are seeing is that patients are able to receive more than half of the benefit at a $69 a month price point.
Between the breadth of eligibility, the attractive price point, and more of an acceptance of oral-based medications, we see continued strong growth in the oral weight loss segment of our business.
Great. Let's shift gears and talk about your international expansion with the recent acquisition of ZAVA. Maybe talk about some of the attributes that are shared across those European markets. I guess what gives you confidence that your U.S. playbook will work in those markets?
Yeah, I think that we, you know, we've been in the U.K. for the last couple of years. That was probably one of the key test points that gave us conviction for, you know, do we want to go broader? I think when you look at human nature, I think a lot of the same principles, you know, typically hold true across markets. There's obviously nuances, but it's very rare, you know, irrespective of what geography that you're in, that people are going to say, I want more friction in my healthcare experience, or I don't want to be healthier, or I want to pay more, like those, you know, or I want less convenience.
When we look at, you know, structurally, what are the things that we've been able to do here in the American market, a lot of those principles around elevating awareness, elevating access, the ability to mitigate side effects through personalization, and candidly have a delightful consumer experience. The how you do that might change from market to market, but those principles are largely going to hold true. When we looked at the success that we had in the U.K. organically, the debate around those principles was less around what the management team spent time on. The debate was more around, okay, are we really ready to take on the mental load of needing to think around different languages, different markets? Is the tech stack ready, you know, for that?
When we looked at what we got through the ZAVA acquisition, we got a very strong leader that has proven an ability to build a business profitably across numerous different regulatory landscapes. We got a platform that has the ability to handle language translation across several markets. When you pair that with the onboarding of Mo , I think the collaboration as well as Nader on operations, our operations leader, the ability to have all those components come together is going to be something that's quite powerful. That said, I think over time, probably the brand will evolve, and that's going to be more of a market-to-market thing. The regulatory requirements in the U.K. are very different from France. When we look at the bench in the U.S.
market that's starting to emerge across the company, as well as the key leaders that we've also added, now felt like a time to be thoughtful around an expansion through de-risking it from acquiring ZAVA, and then also taking on one market that we'll opt to build, which is the Canadian market that's in close proximity to the U.S. I think that will probably serve as an important data point for, as we wrap our heads around that, see success, stage gate the investment there for do we opt to continue to push further into other markets. Based upon the pieces that we've pulled together, we're quite confident that the strategy will be successful.
Let's talk about Canada. You're launching in Canada next year, and that coincides with anticipated availability of generic semaglutide. Given that it's first ever availability of generic semaglutide, what should investors keep in mind?
Yeah, I think that the Canada market will be definitely an important market for us to learn. I think what we also, the elements that we talked around in the U.S. probably are going to hold true, we're confident will hold true in Canada as well. That's our ability to bring a platform that brings numerous benefits to the Canadian population. I think the market there, it's obviously smaller than the U.S., but still quite large. I think there is an obesity challenge across the Canadian market as well. Our ability to have a convenient platform that enables consumers to actively reach out to providers, have those providers have lifelong service to hold them through their weight loss journey. I think when you pair that with revolutionary medicine, I think it's going to be a powerful combination, similar to what we saw very quickly in the U.S.
We also have the benefit and the knowledge historically from building a brand, seeing the elements that are working, knowing some of the challenges in the U.S. It's not lost on us that some of the challenges across markets are going to be different. I think a lot of the commonalities, and we saw this in the U.K., that we see across markets, we'll be able to bring and kind of hit a head start.
Got it. I think we have a minute or so left. I want to ask you one question on financials. I think a lot of investors have been asking about sort of decelerating growth within your core business. Maybe talk about kind of how you think about that segment and what are some sort of drivers that could accelerate growth in that segment going forward.
Yeah, I think it's a great question. I think that while we speak around, you know, kind of core GLP- 1, from my vantage point as well as the vantage point of the exec team, we think around it as a portfolio, a portfolio of numerous, numerous specialties. When we look at the portfolio that we currently have today, we see a great deal of strength across many of the specialties. The oral weight loss business, both men's and women's dermatology, as well as our sexual health daily business, are all growing north of 55% in the most recent quarter. What that growth gives us, when you combine it with also the strength that we're seeing in the weight category, is the ability to take longer-term oriented decisions. When we look at the sexual health on-demand business, it's a debate that the management team had around the customer there.
It is very easy to acquire, not necessarily easy to retain because you run into issues like product accumulation or the concept of being able to personalize an on-demand medication. If you don't know if the person's taking it once a week, twice a week, once a month, it becomes very difficult to add the value that Hims & Hers is known to add. That business, we expect to be a drag on the business for the aggregate growth rate in the non-GLP-1 segment for the next couple of quarters. We take more of a long-term approach.
I think that with the value that we've already seen in the daily platform, with north of 40% of total customers now opting for those solutions and the ability to do things that we're really good at to differentiate us that are very hard, like combine low testosterone with sexual health or combine multivitamin with sexual health or hair loss medication with sexual health, the portfolio of those bets I think will expand. When we look out 18 months from now, two years from now, I think we're going to have a structurally different sexual health business. Our expectation is as you get stronger retention, the marketing teams get more resin on their belt with respect to how do you market to that customer and deliver education around the benefits that come with the platform.
Across the aggregate sexual health category, we'll see an acceleration of growth, which will inherently continue to push the non-GLP-1 b usiness forward.
Got it. Yemi, with that, we're out of time. That was a great discussion. Thank you so much for joining us.
Thanks, Maria. Thank you.