Hims' Business Model

1. Operating Outside Traditional Healthcare System
   • Bypasses insurance-based model
   • Patients pay cash directly
   • Reduces barriers to care (e.g., insurance rules, waiting times)
2. Cost Effectiveness
   • Offers many generic medicines
   • Partners directly with pharmacies for better pricing
   • Negotiates volume discounts
3. Differentiation and Moat
   • Focus on personalized, individualized medical care
   • Vertically integrated model (app, patient interaction, pharmacy)
   • Strong execution of basics (UI/UX, customer experience)
4. Product Evolution
   • Started with basic treatments (hair loss, sexual health)
   • Gradually expanded to skin care, dermatology, mental health
   • Recent focus on weight loss products

Weight Loss Products

1. Legacy (Non-GLP-1) Products
   • Rapidly scaled from $0 to $100+ million in two quarters (Q4 2023 to Q2 2024)
   • Oral medicines: metformin, bupropion, pyrimate, naltrexone
   • Cost: Around $79/month
   • Effectiveness: 5-10% total body weight loss
2. GLP-1 Products
   • More expensive: $200-300/month through Hims, up to $1000/month elsewhere
   • Higher effectiveness rates
   • Not the primary driver of Hims' recent success

Competition and Market Position

1. Amazon's Attempted Entry
   • Speculation about Amazon offering free telemedicine with Prime
   • Difficulty replicating Hims' vertical integration
   • Emotional disconnect: patients prefer Hims' personalized approach over big-box retailers
2. Other Potential Competitors
   • Walmart, CVS mentioned but haven't successfully entered the market
   • Hims' success attributed to vertical integration and customer experience

Future Outlook

1. Bull Case
   • Management projects 10 million members (medium-term goal)
   • Aim to be in every American household
   • Target of 15% free cash flow margins
   • Potential to become a "digitally native urgent care/primary care physician at national scale"
2. Bear Case
   • Potential regulatory changes affecting telemedicine
   • Possible restrictions on virtual visits
   • Supply issues for certain medications (e.g., GLP-1s)

Key Takeaways

• Hims has consistently over-delivered on projections and plans
• Currently at 2 million members, aiming for 5x growth
• Shifting perception from "selling pills" to a comprehensive healthcare provider
• Success hinges on continued execution and navigating potential regulatory challenges