Hims(HIMS) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue grew 73% year over year to $545 million, with an adjusted EBITDA margin above 15% [28][30] - Subscribers increased by 73,000 quarter over quarter to over 2.4 million, reflecting a year-over-year growth rate of 31% [28][30] - Monthly average revenue per subscriber declined quarter over quarter to $74 from $84, primarily due to offboarding of GLP-1 subscribers [30][31] Business Line Data and Key Metrics Changes - Strong performance in dermatology, oral weight loss, and daily sexual health offerings, all sustaining year-over-year subscriber growth rates above 55% in Q2 [28][29] - Continued subscriber adoption of personalized offerings and success in the weight loss specialty drove year-over-year growth in monthly average online revenue per subscriber [30][31] - Headwinds from offboarding GLP-1 subscribers and a decline in the on-demand sexual health subscriber base were noted [29][30] Market Data and Key Metrics Changes - The company is expanding its presence in the UK through the acquisition of Zava, with plans to enter Canada in 2026 focusing on holistic weight loss programs [24][25] - The Canadian market is expected to see a significant opportunity with the anticipated launch of generic semaglutide, potentially reducing consumer price points to $75-$100 [84] Company Strategy and Development Direction - The company aims to democratize access to precision medicine and expand into new specialties, targeting $6.5 billion in revenue and $1.3 billion in adjusted EBITDA by 2030 [13] - Upcoming launches in hormonal health and lab testing are seen as significant steps forward, with a focus on personalized solutions for hormonal changes [14][15] - The integration of lab testing capabilities is expected to transform care delivery and support the company's long-term vision of preventive health [15][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges and emphasized the importance of consumer-centric healthcare [26][44] - The company anticipates continued robust growth and has established a foundation of talent and capabilities to unlock value for millions globally [44] - Management acknowledged headwinds from the rotation of the sexual health specialty but expects stronger retention from daily offerings in the future [29][44] Other Important Information - The company completed a convertible debt offering, ending Q2 with over $1.1 billion in cash and short-term investments [34][35] - Free cash flow for Q2 was negative $69 million, but positive cash flow generation is expected in the second half of the year [35] Q&A Session Summary Question: Why was now the right time to expand internationally and what made Zava the right company to acquire? - Management highlighted the opportunity to lead in personalized, high-touch, affordable precision medicine globally, with Zava's scalable platform being a key factor [46][47][49] Question: How does the launch of at-home lab testing improve the business? - Management emphasized the importance of making testing affordable and accessible, which could lead to a membership model similar to Amazon or Costco [51][54][56] Question: Can you provide an update on the HERS business performance? - The HERS business continues to grow robustly, driven by dermatology, weight loss, and mental health offerings, with hormonal support for menopause expected to launch soon [68] Question: How is the company approaching AI investments? - The company aims to build an AI strategy that delivers tangible improvements quickly, enhancing efficiency and engagement across the platform [70][72] Question: What are the expectations for the GLP-1 segment moving forward? - Management expects continued growth in the weight loss specialty despite recent headwinds, with a focus on personalized offerings [75][76] Question: How should investors think about inventory levels going forward? - The increase in inventory was strategic to ensure a durable supply for new specialties, with expectations that this will not be a recurring trend [96][98]