🧠 Takeaways:
Hims went from selling boner pills online to a $2.3B telehealth platform. Then Novo + Eli Lilly got their lawyer friends at the FDA to erase 18 months of gains in a week. Stock is -55%. The biz is fine. We're buying the dip.
Grow up or get shut down ($230K lobbying vs Pharma's $391M - that's the whole problem)
Fight publicly, negotiate privately (make every American know Lilly charges $1,000, Hims charges $165)
Turn 2.5M patients into the best clinical dataset in personalized medicine (the moat isn't the pharmacy, it's the data)
+ Learning from DTA Brands
LBAB Community: Learning from DTA brands
Last Monday, I spoke at the For Sure Acquirer Summit about how acquirers can bring new value to their brands.
Stumbled on something bigger than what I went in to talk about.
I'm calling it “DTA” Brands.
Direct-To-Algorithm.
There's no such thing as a Shopify brand or an Amazon brand or a TikTok brand anymore.
The brands going 0 to $100M today don't care where they sell. They're just optimized to blow out every algorithm they touch.
Feastables. Liquid Death. Jones Road Beauty. Roadskin. Young LA. Gruns. Cmfrt.
These aren't channel brands. They're algorithm brands.
Every piece of their business (product, infrastructure, ad creative, offers, site, distribution) is built to feed the machine, wherever the machine lives.
The old question was “Are you a DTC brand or an Amazon brand?”
The new question is “Are you optimized or not?”
I went deep on what the leading performers are doing differently and I'm writing it up.
Sharing the deck now - recording coming soon.
Let’s Examine This Biz
Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.
Hims started selling boner pills online when no one else would. Then GLP-1s made them a $10B biz. Then Eli Lilly got their lawyer friends at the FDA to erase 18 months of stock gains in a week.
Stock price: $17
Market Cap: $5.6B
L5 Performance: +71%
P/E Ratio: 48x
Stock is -55% in 90 days because they exposed their flank with a meh Super Bowl ad and their more well funded competitors leveraged their Gov’t connections to put them in the penalty box.
Today we're buying the dip to turn the most interesting consumer health biz in America into a $100B personalized medicine platform.
Financial Summary
FY 2025 Financial Statements (YoY Comparison)
Rev: $2.3B (+59%) 💪
Gross Profits: $1.7B (+49%) 😟
OPEX: $1.6B (+46%) 👍
Net Income: $128M (+2%) 😊
FCF: $57M (-71%) 😊
Subscribers: 2.51M (+13%) 😟
TLDR Analysis: Insane growth, self-inflicted chaos
Rev +59% at $2.3B scale. Almost no one does that.
Gross margin shrinking from GLP-1 expansion.
FCF -71% from buying multiple compounding facilities.
13% subscriber growth looks fine until you remember it was +45% last year.
The GLP-1 wave is masking core biz decay AND building the future simultaneously.
Let’s TLDR This Biz
Founded:
2017 by Andrew Dudum, a venture capitalist who saw that men would buy sensitive health products online if you removed the shame.
Started w/ ED meds and hair loss - categories worth billions where men were too embarrassed to walk into a pharmacy.
Aha Moment:
2020-2021: Covid normalized telehealth overnight. Realized the model worked for everything - anxiety, weight loss, skincare, women's health.
Renamed from Hims to Hims & Hers.
Went public via SPAC. Became the brand people actually weren't embarrassed to use.
Growth:
GLP-1 shortage = compounding gold rush. When the FDA declared semaglutide (the active ingredient in Wegovy/Ozempic) in shortage, compounding pharmacies could legally make their own version.
Hims charged $165/mo vs Lilly's $1,000. Subscribers exploded. Rev went from $527M to $2.3B in 3 yrs.
Model:
Subscription telehealth. Pay monthly, get an online consult w/ a licensed provider, get meds shipped to your door.
Built MedMatch, an AI system that routes 2.5M patients to the right treatment protocols based on their health data.
3 US compounding facilities (Ohio non-sterile, California sterile, peptide facility). Zava (EU) + Eucalyptus (AU) internationally.
Collapse:
Novo + Lilly ran an 18-month coordinated government affairs campaign to end the GLP-1 compounding window.
FDA declared shortage over Feb 2025. Hims appealed, lost, then launched an oral GLP-1 pill anyway w/ a Super Bowl ad.
Pre-coordinated legal/regulatory ambush erased $5B in market cap in 90 days. The biz is fine. The political infrastructure doesn't exist yet.
Let’s Fix This Biz
Here are our 3 moves to turn Hims into a $100B juggernaut.
1) Grow Up or Get Shut Down
They lost half their market cap because their Super Bowl ad didn’t have the right disclosure.
Which teed up Novo Nordisk and Eli Lilly’s 18-month government affairs campaign - FDA declaration, HHS DOJ referral, SEC investigation to come crashing down all in one week.
That's what happens when you show up to a gunfight w/ a butter knife.
Hims spent $230K on lobbying last year.
The entire pharma industry spent $391M.
The lobbying gap is the symptom. The real problem is zero compliance infrastructure.
Every major product launch, every clinical claim, every new category needs pre-clearance from people who've actually read the FDA regs before it goes live.
Our fix:
Spend $5-10M/yr on lobbying (0.4% of revenue) Bring in an expert with connections.
Pre-clear every major campaign, every new product, every clinical claim before launch.
Reframe the entire company narrative before the next fight.
But the biggest opp is branding the company as the 'Affordable American domestic pharmacy supply chain.'
Hims is bringing jobs to the US and onshoring critical Pharma APIs for their product and undercutting the competition.
Trump’s white house should be eating this up.
The math: $10M/yr compliance + lobbying investment vs $5B market cap destroyed in 90 days. This is the highest-ROI spend in the biz.
Takeaway: Outlaws can make it to $500m. But it destroys value at $2.3B.
2) Fight Publicly. Negotiate Privately.
Despite Hims signing a deal with Novo to sell their drugs they should still run the us-vs-them campaign publicly and relentlessly.
Every earnings call.
Every press release.
Every congressional hearing about drug pricing.
Channel the OG Mac vs. PC energy.
The Luigi Mangione energy in corporate form is real right now. Make the price comparison for the hottest drug on the market the conversation no one can ignore.
The numbers on the public fight:
GLP-1 market = $50B+ by 2030. ~5% share at $165/mo = $2.5B ARR
Hims = affordable vs Big Pharma = expensive is worth $10M+ in earned media.
Run Path B quietly in parallel.
The public fight makes Hims dramatically more valuable as an acquisition target:
CVS/Aetna: Needs a DTC brand + compounding capability. Has $370B in combined assets and zero consumer telehealth brand.
Amazon: Has Pharmacy + PillPack + One Medical but needs personalized medication layer. $57B health division looking for the consumer DTC piece.
UnitedHealth/Optum: 50M+ beneficiaries. Needs a consumer-facing DTC front end. Paid $13B for Change Healthcare - would pay $15-20B for Hims at the right moment.
Fight publicly to win.
Fight publicly to get bought at a premium.
Fallback on a massive exit if the legal/PR fight becomes too expensive (a la YouTube-Google back in the day).
Takeaway: Attack publicly, negotiate privately. The outrage is the leverage.
3) Turn 2.5M Patients Into the Best Clinical Dataset in Personalized Medicine
Hims accepts zero insurance today. Not from Employers, Medicare, or Medicaid.
The entire employer benefits market (160M Americans), the entire Medicare market (65M Americans), and every commercial insurance plan is currently inaccessible.
Clinical evidence is THE leading issue for insurance providers with Hims.
Hims already has:
2.5M subscribers: w/ health data across weight loss, sexual health, mental health, hair loss, skincare
MedMatch AI routing millions of treatment decisions - every data point is a clinical outcome
3 US compounding facilities capable of producing peptides, GLP-1s, hormone therapies, and 10+ other therapeutic categories
GRAIL partnership for early cancer detection via blood draw - the first signal of a full-platform vision
The play: Commission peer-reviewed outcomes studies using the MedMatch data. Publish in JAMA. Walk into CMS and Aetna with data proving Hims personalized protocols deliver better outcomes at 80% lower cost than traditional care pathways.
The financial impact:
Employer benefits: 160M Americans, avg employer spends $15K/yr per employee on health benefits. Even 0.1% penetration at $1,200/yr = $192M new ARR.
Medicare/Medicaid: 65M+ Americans. CMS reimbursement for telehealth + compounded medications = entirely new revenue stream w/ no customer acquisition cost.
Flip referral partnerships to financial arrangements: Convert Ochsner, Mount Sinai, Hartford relationships from referral-only to revenue-sharing. Add $50-100M ARR at near-zero CAC.
Peptide platform: 10+ therapeutic categories from the peptide facility. Anti-aging, cognitive performance, metabolic health, immune function. Each is a new subscription category w/ 74% gross margins.
Takeaway: Pharmacy is the distribution. The data is the biz.
Final Thought
Hims started as a biz that figured out men would buy boner pills online if you made it not embarrassing.
That's it. That was the whole insight.
But to their credit, they built an unbelievable Pharma biz w/ $2.3B subscription health platform w/ 2.5m subscribers, 3 US compounding facilities, international operations in 6 countries, 1,586 licensed providers, and an AI clinical matching system routing millions of treatment decisions.
Now we get to the interesting part of the biz.
Personalized medicine tailored to individual biology is one of the greatest applications of AI in human history.
Everyone gets tailored medicine to them based on their biology information and other key markers.
Going vertical from the customers to the data to the compounding gives them the full ability to completely reinvent how consumers get access to their drugs.
It will be an enormous lift from here to see how they actually can get the prescriptions and the entire system to work, but if they can, they can become the pharma company of the world, tailoring personalized medicine to each customer.
And that is the future of medicine.
