Hims and Hers (HH) is maybe a $100bn company within 10 years (today they're ~$3bn company). Quick thread :

For the unfamiliar: Hims and Hers (HH) is an industry disrupting telehealth + DTC healthcare co. expanding and growing incredibly fast w/ software-esque gross margins. From founding to Q2 2020 (~3 yrs) HH had done 2MM+ telemedicine consultations and had 10MM+ patient touchpoints

HH began in 2017, selling DTC medication for hair loss and erectile dysfunction (Viagra and Rogaine patents expired). Doctors provide recurring prescriptions to patients through the HH mobile app/website and patients are able to buy HH's affordable, branded drugs

Sounds like a small TAM? Not really.

For these two verticals alone the est. market size is $7bn. HH (obviously) didn't stop there, they quickly expanded horizontally to offer prescription Anxiety/Depression and Dermatology medication, an additional $58bn in addressable market

So how's it going for HH financially?

They're very good at what they do. This year HH is on track to do $138mn in revenue (that's a CAGR of 128% over the last 3 years). 91% of that revenue is from endlessly recurring subscriptions and gross margins are an eye-popping 71%

These are stellar #'s for a $2bn co but how is HH a $100bn co?

They're just getting started... 2 amazing developments are on the horizon: 1. Further expansion into branded drugs (sleep, fertility, diabetes, cholesterol) and 2. Full telehealth primary care/prescription services

#1 is exciting. The 4 categories of drugs mentioned have a TAM of $121bn and high gross margins via HH's verticalization. And HH's personalized, loyalty-driven approach builds a trusted consumer relationship that expands the mostly-millennial customer base's LTV significantly

#2 is even more interesting...

It's no secret that the health care industry is one of the last multi-trillion dollar ($4tn) industries to be disrupted and sufficiently improved by technology. Here are some depressing stats as a refresher:

- 50% of US families can't afford their deductibles
- 1/4 of ER visits are the result of inaccessibility to sufficient primary care
- cost is so prohibitive that 1 in 3 families avoided seeking care altogether in the last 12 mo
- 78% of rural counties have a shortage of doctors

HH has set out to fix this. HH announced its partnership with Privia Health, a physician organization w/ 2600 physicians across 5 states, giving HH patients direct access to Privia providers for virtual/in-person primary care (also in early partnerships with Ochsner/Sinai)

What about HH is different from Oscar/Teladoc/Livongo/GoodRx?

In short, everything. HH is a digitally native, verticalized platform with end-to-end, integrated care. They skip the bureaucracies and stakeholder mazes that make healthcare expensively inefficient.

This means...

HH strategically circumvents the difficulty of fixing insurance or being an OEM for hospitals.

HH is comprised of a consumer brand, a distributed doctor network, a telehealth platform, and a cloud pharmacy. Their NPS is 65 vs the avg. health provider score of 9... (Oscars is 23)

On top of its operationally efficient structure, HH is a tech company at its core. Software improves the efficiency of each step in a patients journey (verification, consultation, diagnosis, continuity) resulting in a staggeringly low primary care cost of $39 vs $200-300 normally

Massive tailwinds.

Market Forces: High deductible plans, increasing non-transparent medical/healthcare costs, general adoption of technology

Covid: 64% of providers and 76% of consumers have an increased interest in Telehealth with up to 175x as many visits today vs pre-Covid

Advantages:

1. Own the consumer relationship, high loyalty
2. Building outside of the system (doesn't even accept insurance yet and is still so affordable)
3. Asset-light, low marginal costs, Verticalization, efficiently expandable (already offer primary care in 50 states + DC)

To illustrate HH's efficiency: HH leveraged its infra to launch free support groups during Covid and plans to launch telehealth therapy, connecting licensed therapists to patients at a fraction of the cost

It's like a cloud hospital limited only by speed of regulatory compliance

But many people get healthcare/insurance via their employer?

HH has plans to launch Hims & Hers For Enterprise: a cheap, turnkey telehealth option for employers. The same market forces increasing the cost of healthcare encourages employers to find cheaper alternatives.

The team?

It's incredible. Led by founding CEO Andrew Dudum, the team includes seasoned DTC/healthcare veterans from Walgreens, Stanford Med, Google, Bonobos, Teladoc, Netflix and DSC.

HH was incubated at Atomic and backed by Founders Fund, 8VC, Forerunner, Thrive, among others

HH is going public with Oaktree Acquisition Corp. via reverse merger at an EV of 1.6B (market cap of 1.9B) ~9x 2021e rev and ~12x 2021e gross profit. OAC's current share price is ~15 indicating a market cap of ~3B

Given current high growth multiples, this is very conservative...

HH is est. 30% yoy growth over the next few years vs. 70% growth this year - extremely conservative given current growth and upcoming massive product expansion. Assume 40% yoy , puts rev. at ~4B in 10 yrs. Current high growth/margin multiples of 20-30x rev. = 100B market cap...

I'm likely wrong by up to a factor of 10 but it could be in either direction given the opportunity in healthcare. There's a lot of execution risk, little market risk. I'm rooting for HH to positively affect the healthcare industry, that's the main point of this thread!

Please TikTok don't let this flop, I missed New Years for this @TurnerNovak @richard_chu97 @Post_Market @nikillinit @juliey4 @sarthakgh

Some sources:
https://www.hioscar.com/deepdive/state-of-us-healthcare
https://res.cloudinary.com/forhims/image/upload/v1601546466/documents/investors/HH-Investor_Presentation.pdf
https://res.cloudinary.com/forhims/image/upload/v1604008889/documents/investors/Hims_Hers_Announces_Q3_Update.pdf

Disclaimer: Not investment advice
Disclosure: I own shares
Happy New Year!