Hims & Hers Health (HIMS) has launched a new Testosterone Replacement Therapy (TRT) service, which is a major growth catalyst for the company. This new product creates a significant cross-selling opportunity to its large existing customer base and disrupts traditional healthcare with a subscription model that is cheaper than most insurance co-pays. The stock is considered undervalued, with analysis suggesting a potential 3.5x increase in its valuation multiple over the long term. Due to its price volatility, HIMS is best suited as a long-term investment. For those interested in the telehealth sector, competitor LifeMD (LFMD) is also viewed as inexpensive but is considered a lower-quality alternative to HIMS.

Hims & Hers Health, Inc. (HIMS)

• The company's stock was up 7% following the announcement of its new Testosterone Replacement Therapy (TRT) service. This is seen as a major product launch in a high-demand, trendy market.
• Hims is a dominant player in the telehealth space, representing half the market for telehealth apps.
• The TRT launch is a dual launch, as it also includes the introduction of an at-home lab testing platform. This was a necessary step, as testosterone treatment requires blood tests to monitor levels and screen for risks like prostate cancer.
• Cross-Selling Opportunity: The company has over 2 million customers, with a large portion being original Erectile Dysfunction (ED) customers. The new TRT service presents an enormous cross-selling opportunity to this existing user base.
• Personalized Medicine: Hims is now offering compounded enclomiphene, which can be combined with other treatments like tadalafil (for ED) into a single, personalized pill. This "one person, one pill" strategy aims to improve treatment adherence and efficacy.
• Pricing Disruption:
  • The long-term plan for TRT is priced at $99 per month.
  • This price is presented as extremely competitive, bundling the doctor's visit, lab testing, and the medication itself.
  • This is significantly cheaper than the traditional healthcare route, which is estimated to cost between $1,600 and $3,200 annually, even with good insurance. The speaker's thesis is that Hims is "cheaper than co-pays."
• Future Growth: The new lab testing platform opens the door for Hims to expand into many other areas that require blood tests, such as:
  • Comprehensive cancer screenings.
  • Primary care services (e.g., annual physicals with lab work for cholesterol, A1C, etc.).
• Valuation:
  • The speaker views the stock as "super cheap" based on a valuation metric of EV/GP over RG of 0.15.
  • He believes the company is of the highest quality in its sector and should trade at a premium valuation, suggesting a potential 3.5x increase in the valuation multiple alone.
• Stock Behavior: The stock is described as a "roller coaster" with high volatility. However, the long-term trend is upward, with the stock making higher lows and higher highs over time.

Takeaways

• Bullish Growth Catalyst: The launch of TRT and at-home lab testing is viewed as a significant catalyst that can drive substantial growth. It expands the company's addressable market and creates powerful cross-selling synergies with its large, existing customer base.
• Disruptive Business Model: Hims is positioned to disrupt multiple parts of the traditional healthcare system—including doctor's offices, pharmacies, and lab testing companies—by offering a more convenient, discreet, and affordable subscription-based service for common health issues.
• Potential Undervaluation: The speaker presents a strong argument that HIMS is currently undervalued relative to its growth and quality. For investors who agree with this analysis, the current price could represent an attractive entry point for a long-term position.
• Long-Term Hold with Volatility: The speaker's sentiment is that HIMS is a long-term investment, not a short-term trade. Investors should be prepared for significant price swings (high volatility) and consider this before investing. The speaker specifically warns against using options to sell calls, as a sharp upward move could lead to missing out on substantial gains.

LifeMD (LFMD)

• LifeMD is mentioned as a competitor to Hims in the telehealth space.
• The speaker notes that while he likes LifeMD, he considers Hims to be a "higher quality" company.
• In terms of valuation, Hims is described as being "a little more expensive" than LifeMD, but both are considered "dirt cheap" by the speaker.

Takeaways

• Sector Competitor: LifeMD is another public company operating in the same disruptive telehealth sector as Hims.
• Relative Value Play: For investors interested in the telehealth space, LifeMD could be considered an alternative or a complementary investment to Hims. According to the speaker, it may offer a slightly cheaper valuation, though he personally prefers Hims for its quality and market leadership.