Good afternoon and thank you for joining us on today's conference call to discuss Hims & Hers Health, Inc. Second Quarter 2021 Financial Results. Joining me on the call are Andrew Dudum, our Chief Executive Officer; and Spencer Lee, our Chief Financial Officer.

On this call we will be making forward-looking statements, including financial guidance and expectations for our third quarter and fiscal year 2021 growth, expansion into new categories, strategies, customer demand and products.

These statements reflect our best judgment based on factors currently known to us and actual events or results may differ materially. Please refer to documents that we file with the SEC including the Form 8-K filed with today's press release.

Those documents contain risks and other factors that may cause our actual results to differ from those contained in our forward-looking statements. These forward-looking statements are being made as of today and we will disclaim any obligation to update or revise these statements.

If this call is reviewed after today, the information presented during this call may not be current or accurate. We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.

For historical periods, a reconciliation with GAAP and non-GAAP results is provided in the press release filed today with the SEC on an 8-K and also available on our website. And with that, I'll now turn it over to Andrew Dudum..

Welcome and thank you all for joining our Q2 earnings call. We are proud to share that we've continued our outperformance on both the top line and bottom line of our guidance range this quarter with revenue of $60 million plus and adjusted EBITDA coming in at a loss of $5 million.

With the team's steadfast focus on growth and efficiency, we've expanded gross margins to an all-time high of 78% while adding nearly 200,000 subscriptions over the last 12 months.

The results this quarter are a continued validation of our innovative consumer-oriented business model and we believe we are leading a secular trend that will transform healthcare as we know it. As a newly public company, Hims & Hers is in the earliest chapters of our story.

And as such we are excited with each quarter to share more insights into our vision for the years ahead. We have built the management team of both industry veterans and technology innovators, who are combined, capable of making big bets on the future of digital health.

I am confident our unique growth mindset, our commitment to a multiyear time horizon and our proven diligent execution will continue to be the engine for our success. Our vision for the future is simple.

We are building Hims & Hers into the new front door to healthcare, a new front door that will span dozens of medical specialties, welcoming customers of all demographics into a unified consumer platform that looks and feels and talks to them in a way that gives them confidence they're in the right hands.

I strongly believe that the great unlock in telemedicine will be the power of personal. The winners in this emerging category will be providers who offer a level of service, familiarity and quality on par or above that of the relationship you have with your primary care physician.

That's why we're putting personal on our strategic agenda as a key pillar of success. For the first time in history, we believe the infrastructure and capabilities exist to deliver care made for each patient uniquely. This is a new frontier to medicine, not a nice to have for the strategic driver of the business.

For these reasons I believe the majority of healthcare delivery will begin on a platform like ours in the future. No waiting in lines or jumping through hoops to find clinics, specialists, pharmacies or in-network care.

I also believe the new front door will have an international entrant, shipped by the US's innovation in telemedicine but quickly followed in dozens of major international markets. International is an area we made important progress during this quarter, which I'll touch on later in my remarks.

The opportunity to digitize and consumerize the healthcare system on behalf of everyday people is one of the largest transformations in technology and innovation globally over the next decade.

And while many industry veterans have yet to realize this new model will be the primary way in which people engage with healthcare, we are quickly moving ahead, investing in the brand, the experiences, the technology and the capabilities for the future. Given this opportunity, our strategy is long-term oriented.

Everything we do is in service of an opportunity that will continue to accelerate and grow over years, both in the US and overseas. Our investments in infrastructure, differentiated technology and capabilities and our continued excellence in building long-term equity in our brand will be how we win.

I've often spoken about our plans for continued specialty expansion, international ambitions and strategic technologies and defensible infrastructure. I'm proud to say this quarter was one where we took large strides in laying foundation, across all three of these areas.

Our investments here are at the crux of our strategy to build a differentiated healthcare platform for consumers. Let me share a little bit about each. As of this quarter, Hims is fully rolled out in four major specialty categories, sexual health, dermatology, primary care and most recently behavioral health.

Each specialty is growing quickly, layering diversity into our business as we scale. And while early categories such as sexual health continue to scale, our newest categories such as psychiatric services, therapy and broad behavioral health are growing the fastest.

Our behavioral health specialty has the potential to be a meaningful pillar for Hims & Hers, offering a differentiated service relative to other providers, as we combine psychiatry, live group sessions and individualized therapy within a unified platform.

This quarter, we launched our behavioral health dashboard, allowing customers a centralized hub for flexible and affordable mental health services.

Within their dashboard, patients can coordinate care select providers schedule therapy appointments, track their progress, message their psychiatrists and manage the medication, all from one mobile-first system.

From the consumer demand, we've seen to date and the early acceleration of that business, we believe this specialty to be a foundational pillar of the company in the future, differentiated by a comprehensive set of services and offerings from psychiatry and live group sessions to individualize psychotherapy, we believe the Hims & Hers mental health platform offers something truly unique to patients in need.

With nearly 80% of our patients, leveraging our psychiatric services, reporting improvements to their mental health, our team is more motivated than ever to double down on these initiatives.

This new category only fully released this quarter is just another data point proving our consumer-first business model can and will scale, as we continue to introduce more offerings and categories.

We expect the future of the company to progress like its past, rapid expansion into new specialties likely doubling the number of core categories we're in by 2025, the same approach, the same model, getting more efficient and delivering more value along the way.

As I've mentioned before, we believe Hims & Hers has a unique opportunity to become a consolidator and ultimately the leader in this digital transformation of consumer health. Every month, we see dozens of opportunities to acquire teams, technologies and brands, help accelerate the reality of our vision.

The Hims & Hers brand is an attractive strategic partner for many innovators in the space, providing us ongoing access to deal opportunities. We've looked at hundreds of these companies over the last few years with few generating excitement for management.

This quarter, I was thrilled to share that we announced two transactions that not only fits squarely into our long-term vision, but accelerate our ongoing initiatives, specifically relating to our international ambitions and investments in differentiated technologies and capabilities.

Let me take a moment to provide some color for both of these acquisitions. First, we acquired Honest Health, which accelerates our geographic expansion with operational capabilities to support our long-term plans for the UK and Western Europe.

Led by Sam and Pablo, Honest Health has demonstrated a powerful combination of leadership, passion and innovation in digital health that will further elevate our ability to provide the Hims & Hers experience to a new segment of consumers in the UK and beyond.

Similar to our commitment to expand into more specialty categories in the coming years, we do have the same ambition in key international markets. I believe the new front door to healthcare will be open to a worldwide audience.

And as such, we will continue to find opportunities to invest both organically and inorganically in teams and infrastructure for that global future. In our second announced acquisition this quarter, we acquired, Apostrophe, a leading teledermatology platform and compounding pharmacy in the US.

As I've shared before, clinical dermatology today stands at a staggering $44 billion market. However, what is even more staggering is the retail dermatology market think Sephora stands at a whopping $150 billion market.

It is my belief shared with the founders of Apostrophe that over the next five years innovative platforms such as Hims & Hers and Apostrophe will continue to move market share from retail to clinical.

Why pay $50 for an over-the-counter cream with no studied clinical efficacy what a personalized bespoke prescription treatment can be compounded for a specific need and delivered to your door within days for the same price. My long-term belief in this market transformation is at the core of why we acquired Apostrophe.

Built upon their Arizona-based compounding pharmacy, Apostrophe has garnered deep love from their consumers with revenue growing at 120% CAGR over the last four years and building one of the most loyal and diverse patient population in dermatology. This acquisition was a no brainer for management.

The dermatology market is so large and growing so quickly that the front door as I've spoken about needs to be broad. Apostrophe widens that door with a new brand entrant for a new segment of consumers. Dermatology was the second fastest year-over-year category last quarter.

The acquisition increases both the volume and variety of our dermatology consumers. And even more importantly this investment in infrastructure is second to none accelerating many of our existing initiatives.

Ben Holber, Founder and CEO of Apostrophe has built a company capable of delivering a range of bespoke cynical compounds for dermatology conditions ranging from melasma to hormonal acne. These custom formulations provide patients with a degree of personalization rarely found in even the most high-end dermatology offices.

Furthermore, potential for leveraging this compounding infrastructure in new avenues not only in dermatology, but for future personalized experiences are vast and exciting. These types of capabilities change the game for clinical optionality, patient personalization and ultimately customer delight.

With Apostrophe, Hims & Hers strengthens our competitive capabilities in dermatology, unlocking our ability to accelerate the expansion of treatments in categories on behalf of customers across the United States.

At the core of our success and quick scale is a differentiated platform for both consumers and physicians and an integrated pharmacy system and medical fulfillment center capable of delivering a seamless end-to-end experience for the customer.

As a technologist for the last 15 years, I have a deep belief that defensible infrastructure and software is a significant advantage to our company. A pillar of our long-term competitive strategy is differentiated capabilities through proprietary infrastructure and medical capabilities.

I believe it streamlines efficiency of the legacy healthcare system and unlocks uniquely seamless consumer experiences. As such our investments this past quarter are reflective of a modern approach to building a dispensable healthcare company.

Last year nearly all of our pharmaceutical delivery over-the-counter fulfillment and topical compounding capabilities were outsourced to third parties. Today just one year later, I can report that nearly 50% of our order volume is now being fulfilled out of our Ohio pharmacy and fulfillment center.

This 300,000 square foot centralized hub has been a large investment in technology, software and infrastructure with a vision towards non-reliance on third parties and a platform suited with unique capabilities.

I'm excited to share by year-end 2022, we believe nearly 100% of our services and treatments will be filled via our verticalized infrastructure, further unlocking efficiencies and capabilities consumers are looking for.

In addition to the purchase of Honest in the UK, the strategic acquisition and integration of Apostrophe and their compounding capabilities and the quick rollout of our Ohio-based pharmacy and fulfillment services. We also have been investing deeply this quarter in our anticipated mobile platform and insurance offering.

Every day consumers search for his and hers across the iOS and Android app stores. Our brands and consumer awareness drives people to find this across all of their devices and we're working hard to build what we believe will be an exceptionally unique experience for them.

One should look for exciting announcements regarding our mobile platform in the coming quarters. Our teams are hard at work designing and building what I believe to be the future home for Hims & Hers members, a home that helps drive deeper engagement and ultimately healthier lives.

In addition, our team continues the integration of insurance reimbursement as part of the Hims & Hers platform. This is a key component to affordability for certain types of care and patient populations, which is core to our mission of expanding access for everyone. Expect to hear more about this rollout in the second half of this year.

While early in our company's life, the road ahead is as clear as day, more specialty conditions that consumers love like our newest offerings in psychiatry, more investments in personalization and bespoke treatment capabilities like Apostrophe and more laying the global groundwork to take this model.

So clearly, the healthcare model of the future to more markets overseas all in service of delivering personalized healthcare and scale that people love. I've said this before, but our organization is made up of people passionate about building the future of healthcare.

We pride ourselves on being visionary in our sector and standing consistent execution and delivering growth and I feel this quarter is again highly reflective of our ability to be the leader in this transformation.

With that I want to thank everyone on our team who've continued unwavering focus on our vision is driving such outperformance and welcome the teams at Apostrophe and Honest Health to the family. We couldn't be more excited about our future together. I'll now turn the time over to Spencer who can share more about this past quarter's results..

one, inheriting the ongoing marketing expenses of Honest Health and Apostrophe; and two, costs associated with celebrity endorsement agreements including Miley Cyrus, which will include approximately $2 million to $3 million in stock-based compensation expenses within marketing expense in addition to other cash-based expenses.

We expect total stock-based compensation expenses for Q3 to be between $12 million to $14 million. For the full year 2021, we are raising our revenue guidance to a range of $251 million to $255 million, an increase of $29 million at the midpoint versus our previous guidance.

We are narrowing the range for adjusted EBITDA losses to $35 million to $40 million for the year. Similar to last quarter's guidance, our current internal financial forecast as Q4 revenues roughly in line with Q3. Our Q4 revenue guidance can be implied from our full year guidance as $69 million to $71 million.

As I mentioned on our last call, as a young and newly public company, we intend to provide guidance that we are confident in our ability to achieve based on the current data points we see in the business. Given the data points we have from last year, we feel like it is appropriate to keep our Q4 revenue guidance in line with Q3.

Finally, I wanted to provide a brief update on our share count given that both are announced warrant redemption and the Apostrophe acquisition happened after quarter end. As of 6/30, we had approximately 193 million common shares outstanding, eight million warrants, 17 million options and four million RSUs for a gross total of 222 million shares.

The warrants and options include a weighted average strike price of $10.89 and $3.28, respectively. We expect warrant redemptions to eliminate 7.6 million warrants and to issue approximately two million shares of common stock through the redemption. We issued 8.1 million shares and 700,000 RSUs in July in connection with the Apostrophe acquisition.

Pro forma for these two transactions we would have had approximately 203 million common shares outstanding, 600,000 warrants, 17 million options and 4.6 million RSUs for a total gross count of approximately 225 million shares. We are exceptionally pleased with the results we were able to deliver in Q2.

The strength of our financial performance in the first half of the year and the strong guidance for the second half really highlight the power of our core differentiation across audience, brand and experience.

We are absolutely resonating with and delivering on all fronts for a generation of technology first and experience-oriented buyers who are seeking help for deeply personal medical conditions.

We continue to see strong investment opportunities ahead including our partnerships with Jennifer Lopez and now Miley Cyrus which all further validates the quality and power of the brand that we fill and our ability to uniquely reach an audience of brand-savvy consumers.

Our full year revenue guidance now represents year-over-year growth rate of 69% to 71% for 2021. In fact, the midpoint of $253 million in revenue is now substantially ahead of the 2022 revenue guidance of $233 million we provided last year. It feels pretty good to deliver over two years' worth of growth in just 12 months.

I look forward to a strong second half of the year. With that, we can open the call to questions.

Operator?.

Thank you. [Operator Instructions] We have your first question from Jailendra Singh with Credit Suisse. Your line is open..

Hi. This is actually Adam on for Jailendra today. Thanks for taking the question. Congrats on the quarter and two acquisitions you guys have now closed. I wanted to step back and just ask about some other developments in the marketplace, but specifically around Optum.

So curious, if you take on solutions that Optum rolling out in the Optum store, I know, it's early since their launch plus they have some more solutions coming out.

But I guess, just how do you think about a large-scale player such as Optum entering the market and making the market more competitive at this point?.

Thanks, Adam. It's a great question. I think, we look at what they've done and I think there's a number of players that are starting to think about moving towards this type of an operation.

I think where really we think of ourselves as different is this ability to build truly a beginning to end experience for the consumer that people love, right? And this is not a traditional healthcare talk. This is traditional consumer Internet talk actually right at its core.

And so from the moment people come to us, and get educated about a specific condition to that comfort in knowing, they're meeting with a specialist, and then all the way down funnel when they're getting a personalized treatment delivered to their door that was actually made exactly for them right, and built for them by their provider and their physician groups that is really special.

And I think it's really unique. And so I'm excited that, there are investment dollars moving into the space, because frankly a lot of people need help in this country.

But I think the reality is, is you've got a $4 trillion market, of which I think about 80% of healthcare delivery is going to be moving towards essentially a delivery service that looks like Hims & Hers in the next 5 or 10 years. And so this market is massive.

I think one of the things that is practically a reality is that, there have been a tremendous amount of investments in this space in the last couple of years, especially going into COVID.

And none of these external factors have frankly impacted our core business at all, right? We've got increasing revenue growth accelerating 70% upwards guidance this year, subscriptions growing incredibly, gross margins growing to an all-time high, as we expand and innovate into new categories and new services.

And so I haven't seen these external factors affect us to date nor do I expect frankly for any of these elements to affect us in the future. I think we have a ridiculously focused vision of delivering a world-class consumer experience from start to finish. And I think that's really different frankly than most things in market..

Got it. And then as a follow-up, I just wanted to go back to the mix of growth coming from AOVs and net orders.

So with Apostrophe and Honest Health coming on board, how should we be thinking about the opportunity there for AOVs to accelerate once you're able to refine their existing pricing, subscription types and alongside any launch of new products? Thanks..

Yeah. So I think for both acquisitions in the near term for Q3, I mean, we've guided to a little margin compression and slightly lower AOVs in Q3. And frankly, that opportunity that you're describing is – was one of the main strategic reasons why we were so excited about these acquisition opportunities.

Its early days for Honest Health and Apostrophe and their businesses are in a fairly similar place, where we were a couple of years ago. And we have executed on that playbook, have unlocked a ton of value in terms of expanding margins growing AOVs, improving unit economics, growing LTVs.

And we see that exact same opportunity with these two assets and know that playbook well. So, I think you can expect us to work really hard and capture this opportunity, and unlock this value here in the near-term..

Got it. Thank you..

We have your next question from Daniel Grosslight with Citi. Your line is open. .

Hi guys. Thanks for taking my question and congrats on another strong quarter here. Some of your competitors have seen pretty dramatic increases in CAC particularly on the mental health side of the business. It doesn't appear that you've seen quite as a dramatic increase.

I'm just curious, how you shifted your business or marketing campaigns to offset some persistently high direct response ad rates? And you think kind of in relation to mental health in particular would be very helpful. .

Yes. That's a great question, Daniel. And I think the ability to maintain efficiency on the acquisition side is a part of the engine and expertise that I think we've built in the last few years.

Specifically on mental health, what I think is very unique about that category for us and it's similar to all the other categories in the business, is close to 100% of those patients coming to us are first-time buyers right? These are people who are being activated by the brand, who are being activated by our destigmatization campaigns, by the fact that we're partnering with celebrities to talk authentically about different issues they're struggling with.

And then they're coming to us getting educated on our blog, they're talking to the psychiatrist and they're learning about options and then down funnel converting. And I think that's a really different experience from traditional players in mental health.

So I think it's worth mentioning because I think that's really where an expertise exists within this company, which is targeting customers who we know could need help leveraging a bridge to give them a trusted place to be exposed and to be vulnerable connect them with education that makes them feel like they're in the right place and then ultimately help them downstream.

And I think that's been a really big part across all of our categories, how we've been able this year to frankly spend tremendous amounts of marketing at a more efficient rate. Usually, it's the opposite, right? You're spending more and it's going in the wrong direction.

And I think that capability, that engine and that expertise we spend a lot of time on. And I think mental health in particular it's a extra focus. The other thing I would add there that, I think has been a huge advantage to ours is the comprehensive services provided within our mental health offering.

This is not just simple group therapy conversations. It's not just simple text-based chat with a therapist it's not just psychiatric.

It's all of that it's live group sessions for core topics such as brief management or anxiety and depression or parenting during COVID, you have all of these services together in one place creates an incredible amount of efficiency and leverage at the front door right? If you think about it, you can message and market a unified home and hub for all of these offering and then downstream convert appropriately into the right selection.

And so I think that differentiated, I think more comprehensive set of offerings compared to what the market has also created a tremendous amount of leverage when you think about efficiency and driving acquisition on the DR side of the house. And Spencer, I'll let you add anything else there. .

Yes. I mean to put a finer point on our Q2 performance I mean Q2 was an incredibly efficient quarter. Our tax in Q2, were roughly in line with where they were in Q1. So others in market to the extent that they're seeing upwards pressure we've been able to maintain. And Q1 for us was already an arguably very efficient CAC quarter.

I think where this manifests itself, is the fact that in Q2, our marketing expenses increased by less than $1 million quarter-over-quarter the revenue increased by $8.4 million over the same period.

So the level of efficiency that we're able to generate and strategically investing in brand and driving organic traffic and having a broad diversified marketing mix as our budget strategy has -- you can see beginning to pay off in the broad efficiency that we've been able to generate year-to-date. .

Got it. Very helpful. And as we look at implied adjusted EBITDA guidance for 4Q, looks like you're assuming at the midpoint around $4 million of sequential EBITDA degradation.

What's driving that degradation in 4Q? Should we think about gross margins kind of stabilizing in that mid-70s range and you're just making some more investment in the back half of the year?.

Yes. So with adjusted EBITDA I mean I think high level the quarter that we just put up right demonstrates just the level of efficiency and leverage that we have in the business, right? In Q2, effectively our monthly EBITDA loss was about $1.5 million per month.

So I think there is a clear path to profitability for us just given the performance that we put up in Q2. I think on -- in the for the rest of the year for the second half of the year we're really excited about the investment opportunities and ability to drive efficient growth that we're seeing in the second half of the year.

I mean one investing in a big new market like the UK with Honest Health, investing in a $40 billion category and continuing to take share in that massive dermatology category with a brand like Apostrophe and investing in behavioral health which is already the fastest-growing business line in the whole company.

So there's just tremendous opportunity that we're seeing in the second half of the year to continue to invest in growth and invest efficiently. And that's what we're guiding to. .

Got it..

We have your next question from Michael Cherny with Bank of America. .

Hi, this is Charlotte on for Mike. I was just wondering if you could provide some more color on how you're thinking about category expansion. .

Hi, thanks so much for the question. I think at a high level the way you should think about it is fairly reflective to what we've seen in the past right? I think the future will look relatively simple or similar which is probably systematic expansion in the specialty categories that we know our patients absolutely need.

So when we started the business there was a core focus on hair care on sexual health for men. We then launched dermatology, psychiatric services. And it's these four categories along with primary care that are the core of the business today three to four years in right since we founded it.

I think it's our expectation that you can expect to see that number of categories likely double by 2025. And I think we have immense amount of connectivity and relationship with these patients frankly to understand where to go next. And I think that was a big part of how we got to the psychiatric service offering.

And ultimately why it's one of the fastest-growing categories within the business. That is because we understand these patients and we're treating them on a daily basis. And so I think you should expect the same kind of systematic expansion.

We're not the type of team just to be honest that's throwing a tremendous amount of things against the wall and seeing what sticks. That's just not -- that's not who we are.

I think we want to understand the fundamentals of an existing category, understand why there's so much friction in it, understand why patients aren't seeking care, how to remove costs, how to remove stigma, how to remove all of the elements getting in the way and then really thoughtfully launch it in a way we know it's going to be received exceptionally well.

And I think that's really what you've seen on the derm side of the business as well as the psychiatry side of the business. And I think that's what you should expect in the next few years. .

Great. Thank you. .

[Operator Instructions] We have your next question from Jessica Tassan with Piper Sandler. .

Hi, thank you for taking the question and congratulations on the quarter.

So I guess maybe just building off the question just prior, how are you thinking about maybe the trade-off between expanding into new specialties and then just building kind of density of providers in your existing specialties? And then further to that how are you employing the providers within each of your specialties today? Are they independent contractors or employees how just that work?.

Awesome. That's a great question. I think I kind of touched on this in the last question but we believe that each of the core categories we're in today sexual health, dermatology, psychiatric services, primary care these are deep categories. Let's take dermatology as an example and it's related to Apostrophe, an acquisition, we made this quarter.

That's a $40 billion clinical dermatology market. I think what's most interesting about this market. And it's similar to a lot of the other markets, we're talking about, there's a $150 billion retail dermatology market think Sephora.

I think in the next five years there's going to be rapid dollars shifting from retail to clinical dermatology, because if you can get an affordable prescription that's compounded and bespoke exactly for your skin, that works with clinical efficacy, why would you then spend the same amount of money on something that really doesn't have that clinical efficacy.

So I think all of these categories that we're in today are going to continue to be rapidly expanding. I think that's why, as Spencer put forward in guidance, raised 70% year-over-year. We believe, there's very robust growth within them.

And then, when you look at the pharmaceutical side of the house essentially the percentage of these patients suffering in the U.S. were actually getting treated in each of these conditions, it's 1% to 2% penetration. These are massive markets, very underpenetrated. And so we think there's years of continued robust growth within them.

And so for that reason, the expansion is systematic, right? We are introducing new categories that we believe are capable of being pillars in the company in the next five and 10 years.

And so a lot of focus internally, a lot of strategic focus on maybe one or two new categories every single year, but it's weighted just for some color context, it's weighted in that type of demand or because of the robust amount of opportunity we see in the core experiences that we have today..

Okay..

And with respect to, how our providers are employed the vast, vast majority, are 1,099 contractors and paid on an hourly basis..

Thank you. That's helpful.

If I could just follow-up with one quick one, so just on the ramp of the pharmacy and fulfillment center in Ohio, what are kind of the incremental ongoing cost of operating that facility? And where would we find those in the P&L?.

Yeah. So all of the, cost to run the facility are run through SG&A effectively. And a lot of the fixed costs are already in place. So the biggest chunks of this are things like rent expense, the CapEx that we've already spent to build out the facility. And install all machinery, which is flowing through the P&L, through depreciation expense in SG&A.

The primary variable expense that exists going forward, as we ramp this up is essentially labor, right? So, staffing up the warehouse staff, staffing up the pharmacist, as we increase volume through the facility, but the fixed costs already exist in the P&L today.

And as we ramp-up volume, we're just going to wind up amortizing all of these fixed costs over a larger order base, essentially getting operating leverage out of G&A, as we increase volume overtime. And overtime, I think we've shared this in a few calls at this point.

But we expect in the long run, that we'll be able to get an additional one to two points of operating margin, as we scale this and sort of fully utilize the facility..

Got it. Thank you..

We have your next question from Ivan Feinseth with Tigress Financial Partners. Your line is open..

Hi. Thanks for taking my call, and congratulations on another great quarter and the ongoing progress. Can you guys….

Thanks Ivan..

… give a little bit more detail of your M&A, strategy and your product development like, where do you see the opportunity to acquire? Or how do you measure the opportunity to acquire versus develop your own line of products like, you did with the Apostrophe as an example?.

Yes, it's a great question. Thank you for that. I think, at a high level and I think we've shared this in the past. The core business on Hims & Hers is continuing to grow extremely fast, right? And so, from a focus standpoint, the vast majority of focus is internal. We believe those categories, for the last question, are massive.

We believe they're accelerating. We believe the adoption rates are increasing. We believe they're going to take more share. And we believe we can activate these patients in a really unified -- unique way. And so, most of those efforts internal.

I think what we have realized and just providing color on the strategy is, Hims & Hers is an incredibly strategic partner for a lot of innovators. I think they look to us as a partner they're excited to work with. They look to us as an opportunity to find leverage in their business.

As Spencer was talking about, within Apostrophe, there's an operational capability that we have that can help unlock accelerated efficiency on their behalf.

And so while hundreds of these opportunities and it's been quite literally hundreds of these come through Spencer and our inbox and desk probably on a yearly basis very, very few ever meet the kind of criteria that gets management excited.

I think what that is, is a rare opportunity to find unique talent, unique capabilities or experiences or unique infrastructure that can unlock some type of world-class next-level customer experience, right? And so when you look at Apostrophe, when you look at Honest Health, what those teams have done is built a degree of infrastructure and capabilities capable of creating bespoke personalized treatments for patients that are incredibly rare to find, even at the most expensive dermatology office or hair care office, specialists, it's incredibly hard to find and if you do, it is hundreds of dollars.

And they've built an infrastructure capable of delivering that at scale. And so, that was one of the few diamonds in the rough, so to speak.

But I think we are opportunistically keeping our eyes open, right? We have a vision for what we believe, is a five and 10-year plan to transition the vast majority of healthcare delivery to a platform like Hims & Hers. I strongly believe that's going to happen.

And so, there will be opportunistic opportunities to accelerate expertise with team, accelerate the brand entrances, more front doors into this healthcare system that treat different customer segments or provide and integrate differentiated capabilities and infrastructure that give us more defensible optionality and better treatments, more personalized treatments on behalf of the market.

So maybe that's a little bit of color as how we think about the trade-off there and the focus there..

Very good. And you said earlier that you're kind of going to let your client base like guide where you're going to -- want to go with new products.

What kind of feedback or guidance so far you experienced and where -- whether your customers want to see additional services or products?.

Where we see demand is fairly straightforward, when you understand this patient population, right? And we have a very unique patient population, its first-time buyers. These are not patients that have been treated by chronic care specialists for a decade and are trying to fill a prescription, fill a prescription cheaply online.

That's not our customer. Our customer is a first-time buyer, they're young, they're millennial in their 20s or early 30s and they're concerned about something.

And they come to us, I think, with that anxiety, right? They come to us concerned and self-conscious and looking for somebody to tell them they're in the right place and tell them that we can help them navigate to feeling better. And so, the psychiatric services, that was something we heard loud and clear for a very, very long time.

So tremendous amount of investment in the past and in the future in that category. More behavioral health-related items, burn out, sleep deeper types of depression. These are also exceptionally common. And so I think you should expect us to get more invested in that category.

What you also see frankly is, people concerned about more chronic condition, but not necessarily sure how to go and get treated or establish baseline. So you have a lot of patients that are in their 30s, they kind of coming of age into their 40s and they're concerned about weight management.

They're 30, 40 pounds overweight or they're concerned about diabetes, because it's in their family or they're concerns because the last blood test of their annual was a high cholesterol, high lipids profile, right? So you're starting to identify patients, I think, that are at that crux in life when they're becoming aware of the more chronic nature condition.

But they're looking at a platform like ours who can seamlessly onboard them and educate them and take care of it.

And so, I think, those are also categories we really believe are widespread within our customer base, and is an opportunity for us to grow with these patients and increase the lifetime value with these patients in the next five and 10 years..

And then on geographic expansion like you expanded into Europe with the acquisition of Honest, what other geographies you think create the best opportunities for you? And how do you go about entering those? Do you think it will be through an acquisition or you can just -- what kind of barriers to entry are there for international expansion?.

Yes, it's a great question. We're exceptionally excited about Honest.

And I think it's reflective of the type of international expansion you should expect for us whether that's an organic investment or an inorganic, which is you have a market in the UK and also in Western Europe where you have similar consumer dynamics, consumer expectations, consumer frustrations with the healthcare market, right, the same type of friction exist and high cost exist, the same type of delay it might take -- with NHS, it might take weeks for you to schedule an appointment or even months to meet with the therapist.

And so I think we look for markets where there's similar consumer dynamics, but also some more regulatory, right? I think we are in the early days in the last, let's say, three to five years, but the US really coming to a point where it's accepting the synchronous and asynchronous modalities for telemedicine.

I mean, I think COVID really helped accelerate people's awareness of the benefits of these types of dynamics. And so I think the international markets are catching up. I think you see in the UK, in Australia, in Germany, in Canada a lot of these markets are starting to get to a place where it makes a lot of sense for us to take a look.

And then also two years ago pre-COVID spend a lot of time in Asia and the Middle East meeting with their health systems and meeting with their governments and regulation teams. And they are also looking at the US innovation and trying to figure out when they can do the same thing.

And so I think in key Asian markets in the Middle East, you'll also have that coming just probably a couple of years behind those others that we first mentioned..

Thank you and congratulations on the great results again..

Thank you, Ivan..

I'm showing no further questions at this time. I would now like to turn it back to Mr. Andrew Dudum for any closing remarks. .

Thank you. Thank you all for joining today, and thank you for the great questions. I want to send a special thank you to our team to Apostrophe to Honest. We're exceptionally excited and proud of everything that you guys have accomplished today, and then looking forward to sharing more with you all very soon. So, everyone, please have a great day..

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..