Hims & Hers Health, Inc. (NYSE:HIMS) Q4 2022 Earnings Call Transcript

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Yemi Okupe: Yes. I think with respect to the timing, I think the factors as Andrew mentioned, that would drive that would be opportunistic from time-to-time in exchange for making the platform sticky. We’ll continue to reevaluate some of the pricing options in exchange for longer durations. Additionally, we do expect over time more and more of the ecosystem to be driven by value-added services, as well as the personalized products. And so, really the combination of making those experiences better. It’s not as if we’re going to see gross margins degrade overnight, but over time as we start to continue to optimize the customer experience, we’re likely to see that start to normalize in the mid-70s and embed in our assumption in the 20% to 30% range factors that in.

Daniel Grosslight: Okay. Makes sense. And then on marketing expenses, those can be a bit lumpy based on new marketing campaigns. You mentioned you had that new partnership with Kristen Bell. Curious if you’re launching any other large marketing campaigns and how should we think about that line item in 2023? Should we see some lumpiness there or are you going to be getting more leverage out of your marketing spend in 2023?

Andrew Dudum: I think we want to leave the flexibility there open for opportunistic investment. I think we’ve said this in the last call. Dan, there’s definitely an opportunity in market right now where we’re seeing a fairly unique ability to take disproportionate share as others in the space are retrenching and I think playing a little bit more conservative. And I think the underlying strength of the model and the recurring nature of the business and the strength of union economics that are improving gives us that energy and confidence to continue to lean in. And so, I think we want to maintain that flexibility that Kristen Bell work has proven to be really valuable and we think there are other partners that likely make sense in a similar vein. But with that said, I think we definitely expect as we continue to shift more and more dollars into brand building initiatives and away from performance based channels, there to be pretty meaningful leverage on that line item.

Daniel Grosslight: Yes. Thanks for the color.

Andrew Dudum: Yes. Thanks, Dan.

Operator: Thank you. The next one is from Jack Wallace with Guggenheim.

Jack Wallace: Hi, thanks for taking my questions and congrats on another big quarter and close to a fantastic 2022. I’m going to ask another set of questions around the 2025 targets. In terms of the growth contribution, are we thinking in terms of new verticals, are there any one or two that to be outsized contributors? Just thinking of some hot categories that some of your competitors have recently entered, it seems to have reignited growth there? And then second is on the gross margin side. Should we read into that, is there being any more of human capital of costs associated with say more time in patients and care providers? Thank you.

Andrew Dudum: Thanks, Jack. I can probably take the beginning part of that. On the category side, we’re seeing very robust growth both from the early categories traditionally on the men’s health side of the house, as well as a lot of the new categories on the Hers side. So, I think at this point still maintain a number of categories with triple digit €“ mid-triple digit growth rates. And so, a lot of the focus continues to be on better understanding those customers, better segmenting them, and then delivering a roadmap this year of proprietary and innovative products that just add a level of personalization to those customers in a way that make that relationship even stickier and have increased outcomes and really an experience they can’t get anywhere else.

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