Q4 2024 Hims & Hers Health Inc Earnings Call
Good afternoon, ladies and gentlemen, and thank you for standing by my name is Calvin and I will be your conference operator today.
This time I would like to welcome everyone to the HIMSS in her fourth quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
He would like to withdraw your question simply press county or start to thank you I would now like to turn the call over to Bill Newby head of Investor Relations. Please go ahead.
Speaker Change: Good afternoon, everyone and welcome to the Ensign herself fourth quarter and full year 2024 earnings call today. After the market closed at least this quarter's shareholder letter a copy of which can be found on our website at investors <unk> Dot com.
Andrew: On the call with me today is Andrew do them, our co founder and Chief Executive Officer, and Jamie, Okay, Our Chief Financial Officer.
Andrew: Before I hand, it over to Andrew I need to remind you of legal safe Harbor and cautionary declarations.
Andrew: Certain statements and projections of future results maintenance presentation constitute forward looking statements that are based on among other things our current market competitors and regulatory expectations and are subject to risks and uncertainties that could cause actual results to vary materially.
Andrew: We take no obligation to update publicly any forward looking statements. After this call whether as a result of new information future events changes in assumptions or otherwise. Please see our most recent 10-K and 10-Q reports for a discussion of risk factors as it relates to forward looking statements.
Andrew: Today's presentation. We also have certain non-GAAP financial measures. We refer you to the reconciliation tables to the most directly comparable GAAP financial measures contained in today's press release and shareholder letter you can find this information as well as a link to today's webcast for investors and Stockholm.
Andrew: After the call of this webcast will be archived on the website for 12 months and with that I'll turn the call over to Andrew. Thanks, Bill what an incredible last few months, we have had to finish a break out year at HIMSS in her as we believe we are building the next generation health care platform.
Speaker Change: Our platform that Leverages personalization and technology, Unlike any traditional health care system, delivering access to affordable on demand high quality and precision tailored care to millions of people.
Speaker Change: The future model of health and wellness that centers around the consumer and the consumer alone.
Speaker Change: This vision requires extraordinary levels of innovation across technology infrastructure and services and I'm absolutely in awe at the team's execution across so many avenues to accelerate towards this vision.
Speaker Change: From our recent acquisition of our new whole body lab testing facilities, which will bring him and her customers a deeper understanding of the comprehensive health and treatment personalization to our acquisition of our new Menlo Park peptide facility, which will establish domestic durability of our supply chain for one of the most innovative.
Speaker Change: An exciting areas of medicine to our Super Bowl AD, which sparked an incredible breadth of discussion around our existing health care system.
Speaker Change: Lastly to our growing bench of impressive talent, making our team an even stronger competitive advantage. We are attracting leaders across disciplines from technology to women's health, who recognize the extraordinary opportunity to reshape American health care.
At the end of 2024 over 2 million subscribers and trusted him didn't hurt to aid them in their journey to better health with thousands more joining daily.
Speaker Change: This vision of an on demand personalized health care platform is resonating with consumers across America.
Speaker Change: Over the past 25 years, Uber, and Airbnb, reshaped transportation and hospitality, Amazon and Shopify revolutionized E Commerce, and logistics, Netflix and Spotify redefined media consumption, and Paypal and square modernized digital payments.
Yes, we haven't seen a similarly transformative shift in one of life's most critical areas healthcare.
Speaker Change: Recently, however, I felt the same sense of disruption in profitability with what we are building at HIMSS in Hurst.
Speaker Change: These disruptors introduced the concept of on demand in a manner I had never experienced hyper personalize and catered to my needs transparent in their pricing and ultimately reliable and empowering.
Speaker Change: These are word never uttered when describing healthcare in America at HIMSS <unk> heard our ambition is simple we plan to change that.
Speaker Change: We've been breaking the status quo since our founding in 2017 and through our vision of what health care, Ken and it doesn't look like we've achieved a breath of accomplishments that few thought possible.
Speaker Change: We've engineered our vertically integrated proprietary technology stack that powers over 10000 patient visits per day, and we believe is home to one of the most powerful completely closed loop datasets in health care.
Speaker Change: We built nearly half a million square feet of cutting edge pharmacies, and fulfillment centers to deliver personalized treatments across dozens of conditions and multiple innovative form factors, helping support high quality clinical outcomes through optimized dosing side effects mitigation and vitamin supplementation.
Speaker Change: And we broadened our brand from one that's focused on niche men's categories like EDI to one that millions of Americans and trust for their health and wellness the.
Speaker Change: Across an ever broadening set of specialties for men's and women's health dermatology mental health adjunctive cardiovascular support and most recently metabolic health.
Speaker Change: We are in the earliest of days in transforming how Americans improve their health and wellness and when we think about the future are investment areas fit into simple yet powerful bucket.
Speaker Change: First by leveraging advancements in technology, specifically AI, we can expand the scope quality and capabilities of diagnostic tools available on HIMSS <unk> platform.
Speaker Change: Second as our technology is more sophisticated and we bring more data rich integrations onto our ecosystem like lab testing and wearable devices, we can expand the breadth of personalized treatment, including preventative capabilities accessible on our platform.
Speaker Change: Third by focusing on the long term consumer journey, we can expand the value of the HIMSS <unk> relationship with improved offerings that drive increased and higher engagement follow up care.
Speaker Change: And fourth as are Verticalizing capabilities and platform gets stronger we see a path to export our capabilities beyond the walls of him and her helping legacy healthcare enterprises transform to be capable of delivering the same quality efficiency and personalization for their patients.
Speaker Change: Our recent investments are in lock step with its future vision, helping to position us to execute across each of these critical areas.
Speaker Change: Data is a key differentiator of our platform as we are one of if not the only large scale vertically integrated health systems spanning the end to end patient journey.
Speaker Change: At the end of 2024, we began negotiations to acquire a provider of at home whole body lab testing, which we are excited to closed last week.
Speaker Change: With this additional capability, we will be able to tax for a wide range of critical biomarkers across harte hormone liver thyroid and prostate helping to proactively identify individual risks for disease.
Speaker Change: We believe this type of comprehensive health testing should be available to everyone. Given the possible life altering learnings given that we look forward to expanding the value each him and her subscriber received this year with comprehensive testing at extraordinarily affordable cost to our customers.
Speaker Change: Whole body testing gives providers, even more insights into their patients' health, enabling a more holistic individualized treatment plan inclusive of personalized medication supplement workout routines and nutrition.
Speaker Change: Full body lab testing will also enable us to expand into specialties, such as menopausal support low testosterone and more.
Speaker Change: With this acquisition, we are elevating the personalization of care individuals will be able to access on our platform.
Speaker Change: Expanding datasets enable us to identify elements of a member's health such as vitamin deficiencies and Unoptimized health indicators, leading to better personalization of treatment through expanded offerings that take these diagnostic components into account.
Speaker Change: We deepened the personalized care, we can offer investments across our nearly half a million square foot footprint across Ohio, Arizona, and California will set the foundation to potentially move from offering hundreds of personalized treatment variations to eventually offering thousands of treatment over the coming years.
At the end of 2024, we also signed an agreement to acquire a California peptide facility.
As we work to address chronic conditions in areas of need among Americans. This facility will provide the ability to explore innovative advances in preventative health metabolic optimization cognitive performance recovery science and biological resistances.
Speaker Change: I'm thrilled that the potential range of treatments and peptide science and we're committed to being at the forefront.
Speaker Change: We believe that this acquisition will provide us with opportunities to more closely participate in this innovation and also bolster our domestic supply chain for treatments that could be critical to America's future.
Speaker Change: As the breadth of treatment and services expand in our platform over the course of the next decade, our belief is that advancements in technology can facilitate materially better outcomes and unlock a level of access unlike anything available today.
Speaker Change: We believe that AI and scaled de identified data will help power extremely important network effects for our platform, enabling each new customer experience to drive improvement to the care and experience of the next.
Speaker Change: We also believe that leveraging AI in our current clinical expertise and intelligence can elevate the types of follow up care available for millions of individuals we see great health care as a combination of appropriate treatment high frequency provider support and access to services that help individuals achieve.
Speaker Change: Your habits.
Speaker Change: In 2024, we launched tools, such as BMI calculators and trackers to help members monitor water intake nutrition movement in fleet all focused on helping our subscribers build a healthier lifestyle. In this next generation of health care, we see a world where AI can substantially elevate the subscriber experience.
Speaker Change: Providing resources with greater sophistication, such as AI torches therapists nutritional and trainers available for $24 seven on demand support to help our customers make meaningful lifestyle changes in pursuit of their health and wellness goals.
Trusted and empathetic AI powered care coordinators to help customers navigate their health care journey.
Speaker Change: In greater transparency and visibility into the reasoning that drive each treatment and service recommendation on our platform in a manner not constrained by the availability of provider time on the platform.
Speaker Change: While our.
Speaker Change: Visions and technology advancements are far reaching we have been energized by the market receptivity to this vision, leading engineering executives World class AI, researchers and operators responsible for building and massively scaling some of the most notable businesses in the world has been part of our year long search for our Chief Technology Officer.
Speaker Change: Sure.
Speaker Change: We have been humbled by the shared excitement for our vision and the widespread passion to transform the American health care system. We.
Speaker Change: We are thrilled to share that we have signed an offer for our new Chief Technology Officer, and we expect to share more about our latest executive team member in the coming weeks.
Speaker Change: Our focus in 2025 will be on continuing to further progress our platform capabilities deepening our competitive moats and expanding our value to customers.
Speaker Change: We'll do this through continued execution across five key priorities.
Speaker Change: First through the integration of the whole body lab testing, we will provide access to richer insights for consumers into their health.
Speaker Change: Cannot stress the transformative unlocks we believe will come from empowering customers with their data died.
Speaker Change: Diagnostic capabilities will serve consumers by supporting our expansion into additional specialties, such as menopause and low testosterone and paved the way for a greater breadth of personalized offerings inclusive of medications supplements and lifestyle changes.
Speaker Change: Second we will continue to invest in our pharmacies and infrastructure. These investments will come in the form of expanding our capacity for sterile compounding as well as further automation of facilities to unlock the capacity to offer access to thousands of more highly personalized treatments in the future.
Speaker Change: Third we will broaden and deepen the capabilities of our technology stack to facilitate even better recommendations from providers to each individual patient.
Speaker Change: As well as lay the foundation for AI centric tools and coaches capable of even further improving the quality of follow up care received on the platform.
Speaker Change: And fourth we expect to conduct R&D for the launch of future specialties, and subspecialties that leverage our capabilities and reach an even broader set of customers.
Speaker Change: Finally, we will continue to position ourselves to be a leader in addressing the chronic obesity epidemic across America.
Speaker Change: There may not be a more impactful use case for precision medicine than America's obesity epidemic, which impact 100 million individuals across the country and result in half a million preventable deaths per annum.
Speaker Change: North of 200000 individuals joining the HIMSS <unk> platform in a span of a year to meet their weight loss needs is evidence of the benefits that consumers see in our approach to personalized medicine.
Speaker Change: As we shared last year, we believe our approach can enable material improvements in clinical adherence and compelling customer satisfaction and we're seeing gains in the realization of this goal.
Speaker Change: In order to truly address the epidemic patients need comprehensive care that extends beyond medicine to making lifestyle changes from nutrition to exercise to mental health and we are dedicated to this approach.
Speaker Change: Precision medicine is about using the right tools for the right patient at the right time.
We believe this approach to personalized medicine will ultimately drive better clinical outcomes by enabling providers to personalize the dose form factor and other clinical delivery aspects of existing clinically validated medications.
Speaker Change: In our work, we are committed to integrity and transparency.
Speaker Change: We are not bypassing the regulatory process, nor are we creating new drugs the regulatory framework for compounding and the FDA have long recognized the need for compounds to be able to compound medication to meet patient needs that utilize ingredients of but that are not essential copies of existing drugs, we focus on.
Providing access to better care and this framework through personalization period.
Speaker Change: We believe that Americans deserve transparency about the system and their options and we will continue to passionately pushback against any attempts to confuse our scare consumers about whether compounding can be done legally and safely.
Speaker Change: We won't claim improved efficacy until the data substantiated.
Speaker Change: We will continue to show our quality and safety process across every step of the customer journey.
We take a logical approach to let patients and providers draw their own conclusions because we believe that patients not pharmaceutical profits should drive our health care system.
Speaker Change: We are aware of that change can be scary for industry incumbents big.
Speaker Change: Big farmers reaction to our call to fix today's stuck in six health care system has been to band together and question the need for affordable compounded solutions and insight fear and regular Americans through broad stroke statement about the safety of all compounded medications.
Speaker Change: As always we will continue to monitor and comply with regulatory requirements related to the G. L. P. One shortages and we will continue to primarily focus within our weight loss category I'm, bringing care to individuals that stand to benefit from our oral based offerings lira <unk> later, this year and clinically necessary pairs.
Speaker Change: All lines dosages cynical type.
Speaker Change: The investments we've made on our platform will help ensure that we can effectively help the millions of potential Americans that can benefit from our holistic approach to weight loss treatment.
Speaker Change: Additionally, these investments position us to be a leader in providing access to high quality treatment to millions of more American as more brand name G. L. P. One medications do generic in the coming years.
Speaker Change: As a founder led company, we have one rare advantage that most companies do not extreme patients.
Speaker Change: While most might get lost in the noise of today's realities. The future is where we're focused a.
Speaker Change: A future where high quality personalized care is available to everyone on demand at affordable prices from the comfort of their home <unk>.
Speaker Change: This vision is coming to reality and it's shaking the incumbent system, we believe that in the coming years that future will be obvious and available to all.
Speaker Change: We look forward to updating you on our progress across these priorities over the course of 2025.
Speaker Change: With that I'll pass it over to <unk> to talk through our financial performance and outlook for 2025.
Speaker Change: Thanks, Andrew I'll start by providing an overview of our fourth quarter financial performance before diving further into our outlook for 2025.
Speaker Change: The success of our platform in 2024 is a reflection of how our ability to democratize access to high quality personalized treatments and services is resonating with consumers.
Speaker Change: Revenue was $481 million and $1 5 billion for the fourth quarter and 2020 for fiscal year, respectively.
Speaker Change: This represents year over year revenue growth of 95% for the fourth quarter and 69% for 2024.
Speaker Change: Helping drive our success is our ability to attract and retain subscribers across our tenured specialties and secondarily and ability to scale new offerings, such as our weight loss treatment.
Speaker Change: Revenue outside of our GOP, one offering increased 43% year over year to $1 2 billion in 2024.
Speaker Change: Reflecting our ability to achieve the floor of our revenue expectations for 2025 a year early.
Speaker Change: Expansion of personalized treatments on our platform is continuing to result in strong subscriber growth.
Speaker Change: Total subscribers on our platform increased 45% to over $2 2 million in the fourth quarter with over 55% of those subscribers subscribing to at least one personalized solution.
Speaker Change: Unique form factors multi condition treatment and personalized messages are unlocking growth in some of our most tenured specialties and serving as an accelerant for some of our newer specialties.
Speaker Change: For example, in the fourth quarter subscribers in men's and women's dermatology grew over 55, and 100% year over year, respectively.
Speaker Change: Our belief is that lab diagnostics, one lock a greater breadth of personalized treatments, which will further expand the runway for growth across our domestic specialties.
Speaker Change: Almost 100 million Americans are currently struggling with weight loss, we launched an oral based weight loss off rate in the fourth quarter of 2023, we saw great success at scale to a revenue run rate of over $100 million and just over seven months.
Speaker Change: Our GOP, one offering which launched in the second quarter of 2024 has experienced similar success delivering north of $225 million of incremental revenue in 2024.
Speaker Change: We believe success behind this offering as a result of the brand equity we have built over the years as well as our high touch model that includes frequent provider engagement tools to build a healthier lifestyle habits and access to personalize treatments.
Speaker Change: Your line of sight to future operational efficiencies gave us comfort to make our injectable offering even more affordable.
Speaker Change: We reduced the price for a 12 month view from $199 a month to $165 per month in December.
Speaker Change: The majority of weight loss subscribers are now opting for treatment plans are six months or more which we believe will translate into strong retention and improve adherence for weight loss of subscribers.
Speaker Change: The motor previous strategic pricing actions, we are confident that these changes will be long term accretive to the platform and provide a path to unlock economies of scale in the future.
Speaker Change: Additionally, we believe that the ability to providers on our platform to personalize successful titration plans and steady state dosages strengthens with each subscriber that has accepted our platform.
Speaker Change: Our ability to rapidly scale a distinct competitive advantage.
Speaker Change: While the addition of subscribers remains the primary component of our growth monthly online average revenue per subscriber is becoming a more meaningful contributor as well.
Speaker Change: On average revenue per subscriber increased 38% year over year to $73 in the fourth quarter.
Speaker Change: Scaling of <unk> as well as subscriber shifting to more premium personalized offerings are the primary growth drivers.
Speaker Change: Significant investment was made in the fourth quarter and areas that we believe set the foundation to drive future economies of scale.
Speaker Change: Despite this investment adjusted EBITDA margins remained strong at over 11% as adjusted EBIT increased over 160% year over year to $54 million in the fourth quarter.
Speaker Change: For the fiscal year of 2020 for our platform delivered $177 million of adjusted EBITDA as adjusted EBIT margins more than doubled year over year to 12%.
Speaker Change: Gross margin declined approximately two points quarter over quarter in line with expectations highlighted earlier this year.
Speaker Change: Scaling of our GOP, one offering as well as strategic pricing actions enacted within our <unk> offering in the fourth quarter are the primary drivers of this change.
We expect margins to start to recover in the second quarter as we reach milestones for pre adjusted volume driven discounts across our operation with further opportunity as we expand sterile fulfillment capabilities within our affiliated facilities later this year and.
Speaker Change: In the fourth quarter, we lean into specialty specific marketing on national stages at scale for the first time.
Marketing as a percentage of revenue in the fourth quarter was 46% representing a five point improvement from the prior year and a one point degradation from the prior quarter.
Speaker Change: Higher retention as a result of an increasing shift towards personalization as well as acquisition of customers organically and through lower cost channels continues to provide confidence in our ability to achieve between 1% to three points of leverage on our marketing spend per annum.
Speaker Change: For the fiscal year of 2024, we exceeded this goal driving marketing as a percentage of revenue down to 46%, reflecting over five points of leverage relative to the prior year.
Speaker Change: Strict management of our operating costs continues to allow us to gain leverage on our G&A as well as operations and support costs.
Speaker Change: In the fourth quarter, G&A and operations and support costs as a percentage of revenue improved three points at one point year over year, respectively.
Speaker Change: Net income was $26 million in the fourth quarter and $126 million for the full year, marking our first full year of GAAP profitability.
Speaker Change: The full year figure included a tax benefit primarily related to the release of a domestic tax valuation allowance, partially offset by current period tax expense.
Speaker Change: Cash flow generation remains strong as we delivered nearly $60 million of free cash flow in the fourth quarter, bringing the total free cash flow generated in 2024 to nearly $200 million.
Speaker Change: Cash and short term investments on our balance sheet, we're over $300 million at the end of the year.
Speaker Change: 2024 was an exceptional year for him and hers, but as Andrew mentioned, we believe that we are just scratching the surface of what our platform can deliver in the years to come.
Speaker Change: Before going into our outlook for the year I will provide insight into how we expect to allocate capital in 2025.
Speaker Change: We expect more capital investment across a few key areas in 2025 to continue building toward our long term vision for the company.
Speaker Change: These areas include first an investment in the expansion of sterile capabilities and capacity within our 503 and 500 <unk> facilities.
Speaker Change: These investments will ultimately enable us to more economically provide offerings such as liraglutide on our platform, which we believe will further enhance the durability of our weight loss offering.
Speaker Change: Additionally, sterile capabilities provided critical component necessary to expand into other areas, such as menopausal support and low testosterone in the future.
Speaker Change: Second we are investing to expand capacity for a greater breadth of personalized offerings through investment in equipment with increased automation capabilities as well as the launch of a larger facility in Arizona later this year.
Speaker Change: Our ambition is to have the capacity to leverage additional de identified data points from interactions on our platform and lab diagnostics to increase the depth of personalized treatments available to subscribers whether that be through additional form factors for multi condition treatments.
Speaker Change: Third we expect to integrate lab diagnostic capabilities into our platform any way that allows us to offer it to your subscribers at a low cost or in some instances for free.
Speaker Change: We believe lab diagnostics can be an additional value add service for subscribers that serve as a foundation for more personalized treatments as well as enable expansion and other specialties in the future.
Speaker Change: Lastly, we will continue our focus on strengthening the long term durability of our domestic supply chain through investment in our recently acquired peptide facility.
Speaker Change: We view this facility and peptide capabilities is providing an additional long term anchor for our focus on the U S based operations as well as an opportunity to explore innovations in medicine made possible through peptide development in the coming years.
Speaker Change: Similar to prior years, we will be thoughtful in our allocation of capital across these initiatives and expect to continue to deliver strong free cash flow in the future.
Speaker Change: With that backdrop I will provide an additional perspective into our outlook for 2025.
Speaker Change: In the first quarter, we are anticipating revenue in the range of $520 million to $540 million, representing a year over year increase of 87% to 94%.
Speaker Change: We expect adjusted EBITDA to be between $55 million to $65 million, representing an adjusted EBIT margin of 11% at the midpoint of both ranges.
Speaker Change: For the full year, we are anticipating revenue of between 2.3 to $2 4 billion, representing a year over year increase of 56% to 63%.
Speaker Change: It is our expectation that 2025, adjusted EBITDA will be between 270 and $320 million.
Speaker Change: These adjusted EBITDA and revenue ranges imply an adjusted EBITDA margin of 13% at the midpoint of both ranges.
Speaker Change: Embedded within our outlook are the following assumptions.
Speaker Change: Given what we know today, we anticipate 2025 revenue contributions from our weight loss specialty of at least $725 million.
Speaker Change: This figure excludes contributions from commercially available industrialism, Semiclad time, which will not be offered on the platform. After the first quarter.
Speaker Change: There may be the potential to offer commercially available dosages of components of microwave type throughout the year.
Speaker Change: However, we see our steady state weight loss offering being primarily composed of our evolving oral based solutions as well as Liraglutide later this year.
Speaker Change: Personalized semi <unk> messages will supplement these core offerings for the subset of consumers for whom it is a clinical necessity.
Speaker Change: Supply chain consistency across 2025 inclusive of affiliated pharmacy, and third party fulfillment and distribution dynamics is a key assumption in our guidance.
Speaker Change: Second our expectation is that the first quarter will remain an investment quarter as a result of the strategic pricing actions made in December and investment in our one minute Super Bowl campaign.
Speaker Change: We expect some pressure on gross and adjusted EBIT margins in the first quarter, but anticipate improvement through 2025, beginning in the second quarter.
Speaker Change: Line of sight exists to realize volume driven discounts across our ecosystem later in the second quarter and further benefit as expected as greater sterile fulfillment capacity from our facilities comes online throughout the year.
Third we remain committed to ensuring that our voices heard during the most culturally relevant moments across America and expect to continue to have a significant voice, but the most important issues across health care it relevant to our platform.
Speaker Change: Our expectation is that we will maintain a one year payback period on our investments while executing these activities.
Speaker Change: Additionally, we have high confidence in our ability to continue driving between 1% to three points of marketing leverage per annum. As a result of first an increasing amount of our spend becoming semi fixed in nature.
Speaker Change: Second and ability to drive broader audience and retain them as a result of high quality personalized solutions available in the platform.
Speaker Change: Third an increasing amount of customers acquired organically and through lower cost channels. As a result of historical investments in our brand as well as entry into specialty is more conducive to word of mouth referrals and lastly, the continued maturation of additional subscriber cohorts on our platform.
Speaker Change: Marketing leverage as an instrumental component of our path toward margins of at least 20% by 2030, which we believe we are on track to achieve.
Speaker Change: Lastly, we expect long term revenue retention to remain above 85% of subscribers engaged with personalized products across more specialties.
Speaker Change: Ongoing subscriber adoption of personalized solutions present, both acquisition and retention benefits across each of our specialties.
Speaker Change: Current trends give us confidence that each of our specialties will deliver more than $100 million of revenue in 2025.
Speaker Change: Capabilities that were built organically as well as recently acquired provide a pathway to an exciting future for him and her in 2025 and beyond.
Speaker Change: Investments that we make in 2025 will position us to transform the way millions of individuals optimize their health through the examples that Andrew highlighted for our long term vision.
Speaker Change: Our ability to drive these strong results would not be possible without the dedication of over 1000 employees across his and hers.
Speaker Change: I'd like to thank them as well as all of our customers and partners that support us in our mission of helping the world feel grateful to power better health.
Speaker Change: We appreciate the support of our subscribers and shareholders and look forward to keeping you updated on our progress with that I will now turn the call back over to bill to kick off Q&A with two questions from our retail community.
Thanks, Amy and thank you to all of the investments Thats enough questions over the weekend, it's clear that that part of the Investor base continues to expand and work side to more regularly engage with this part of the group.
Speaker Change: To get things started this was a top question from the Henhouse, our retail community dedicated to him that is growing in popularity. The question is.
Speaker Change: One of the top three to four strategies that will allow him to reach tens of millions of subscribers on the platform and what is the rough timeframe for reaching this goal.
Speaker Change: Thanks, Bill and thanks him in house, it's been fun to watch you guys.
Speaker Change: <unk> as a community.
Speaker Change: 10 million subs on the platform to me feels.
Speaker Change: Really quite in reach and I think frankly.
Speaker Change: Straightforward from a growth standpoint, if you look at historical growth over the last five years to six years.
My my optimistic Hogan and personally ambition would be to try to achieve this in the next five years to six years I think the top strategies are the ones frankly that the business is operating against today.
Speaker Change: <unk>.
Speaker Change: First to expand the categories in the specialties on the platform. So you'll see deeper segmentation more indications I think the lab testing acquisition. This past week is something that will massively accelerate that breadth of conditions.
Speaker Change: The second I think as a broad expansion of the personalized treatments on the platform and as we talked about in the prepared remarks. My ambition is really to go from a place where we have.
Speaker Change: 300, personalized treatments, which exists today on the platform to a place in the not too distant future, where you've got thousands of treatment variations and this is hyper personalization across dosing side effects mitigation multi condition support vitamin supplementation and ultimately form factor, which we know has a massive adhering.
Speaker Change: <unk> contribution so I think as you expand those personalized treatments youre unlocking different groups of people, who feel like theres something on the platform.
Speaker Change: Better represents their needs and then I think lastly, theres going to be a real accelerated investment in technology that can be necessary to empower this type of scale right now as I shared we're powering more than 10000 visits on the platform.
Speaker Change: Per day, you need to be able to power 20, and 30 and 40000 visits on the platform per day, and so there is a real necessary investment across decision, making tools for providers to help them be more efficient and more precise.
Speaker Change: More long term capabilities with AI that allow the customer to have a higher touch experience after they've been treated and more handheld throughout the long term of their journey.
Speaker Change: And so all of that I think is kind of the big areas. We're very excited from a technology standpoint to have our CTO, joining and be able to share more about that offer in the next couple of weeks.
Speaker Change: Thanks, Andrew we kind of on that last point, we received a lot of questions on AI and its applications on the platform and this one comes from Stephen <unk>, who asked our sales leveraging AI and data analytics to enhance the telehealth offering today as.
Speaker Change: As well as the personalized treatments and drive increased efficiency in the health care ecosystem are there plans for AI, driven diagnostics or automation to improve patient outcomes.
Speaker Change: Yes, Thanks, Stephen for the question absolutely across both of those both diagnostics and long term patient outcome management I think increasingly AI is at the core of everything that we're discussing as a management team. We are building I believe it's possibly the most powerful data set in health care, because that's really the only.
Speaker Change: At scale.
Speaker Change: Fully verticalizing end to end system. So we are overseeing and managing not only the initial patient intake, but the diagnostic component the treatment component the long term relationship to chronic care the adjustment to treatment and ultimately whether or not the outcome is delivered and so that dataset delivers a really power.
Speaker Change: <unk> flywheel I think what youll see from a diagnostic standpoint is real investments in med match, the ability to more precisely identify diagnosis for patients, but also personalized treatments for patients I think youll, obviously see lab work be built into med match in a way that expands the range of diagnostic.
Speaker Change: Abilities and treatment capabilities.
Speaker Change: And then lastly, I think on that follow up care side and on the patient improvement side I think you'll see us.
Speaker Change: Meaningfully change the status quo for what it looks like to be at HIMSS <unk> customer long term one of the things that I think about a lot as a as an entrepreneur what are things that the ultra rich have access to and then how can we broaden that and give that to everybody. So things that people have our on demand therapists right they've got.
Additionally, they have fitness coaches they have meditation purchase. These are people that are in your life, helping you to live healthier lifestyle. I think we are capable of building incredible AI versions of all of those approaches, which really really change the paradigm for how easy it is to change the lifestyle dynamics.
Speaker Change: In your house, and ultimately expand that to tens of millions of more people.
Speaker Change: Down the line.
Speaker Change: Now at the end of all of this.
Speaker Change: I think what is maybe the most exciting from an AI standpoint is as we build these fairly proprietary models internally and validate them internally across our dataset I think theres one day the opportunity to open this up and in partnership actually help.
Speaker Change: Help power the existing legacy health care systems, and help transform those legacy health care systems to actually be able to deliver the HIMSS <unk> quality and experience and personalization at scale and I think that ambition is really exciting for us because it means that we're not only changing health care for the customers that are coming to HIMSS and hurt but we're also won.
Speaker Change: They possibly helping power the rest of the system and delivering great health care to others.
Speaker Change: Great. Thanks, Andrew and thanks, again to all who sent in questions. We look forward to hearing from you again next quarter and with that I'll pass it back to the operator, and we can begin the regular way Q&A.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session as you move into the Q&A session. We ask that you. Please limit your input to one question and one follow up.
Speaker Change: At this time I would like to remind everyone to ask a question press the star button, followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press the pound key or start to one moment. Please for your first question.
Speaker Change: Your first question comes from the line of Maria <unk> of Canaccord. Please go ahead.
Maria: Great. Congrats on strong results on that thanks, so much for taking my questions.
Maria: First I just wanted to ask about <unk>.
Maria: One personalization.
Maria: Just help us understand some of the mechanics around.
Maria: New patients when deciding if that good candidates for personalized dosing.
Maria: I guess first of all the patients that are new to <unk> and maybe haven't had experience with side effects I guess, what's your approach to understanding if somebody will get personalized solution versus some patients that are being attracted to more affordable prices.
Barry: Hey, Barry that's a great question I.
Barry: I think first off we see a lot of patients that come onto the platform that are already experienced <unk> and I think theres no.
Barry: There's no shortage of data to support this I think a huge portion of the population has started tried and unfortunately turned off of them and that data is quite public a lot of it is we've talked about muscle loss concerns extreme nausea extreme vomiting. So what we do from a from a medical standpoint in partnership with our clinical advisors and clinical leaders.
Barry: <unk> is build the information and intake to allow for.
Barry: Essentially an understanding of their existing situations, whether or not they've tried them before their side effects sensitivities. There nausea sensitivities. There is a tremendous amount of personalization with these medications with regard to actual goal weight loss right. No individual body is the same no individual person has the same.
Barry: Ideal health outcomes, and so I think the idea of a single dose regiment for this medication, especially given the extreme side effect nature of it and also the extreme efficacy is.
Barry: Actually really well tailored so with all of that information that then get piped into the EMR within the platform served up to the provider and in partnership with the providers expertise and their experience as well as med match, which is able to educate provider on similar patients with similar dynamics and how they've had great outcomes those decisions can.
Barry: Can be made between the patient and the provider.
Speaker Change: Okay. That's very helpful. And then can you.
Speaker Change: Talk about how the excellent <unk> could impact the competitive setup and some of the dynamics among platforms that have been or Frank component at some level with that.
Speaker Change: Yes, I mean, we are.
Speaker Change: Our pretty clear with regard to what the regulation States and my expectation is most parties in market that had been operating commercial available doses of semi blue tide will seek to do that in the next couple of months.
Speaker Change: Again, the FDA outlined very clearly when you can and cannot compound.
Speaker Change: <unk> during a shortage, which has now indicated is no longer and then second when theres a clinical necessity for that personalization to the facilities. So I think on an ongoing basis outside of the next quarter as commercial doses come out of the market Youll see probably a smaller amount of the personalization happening through the <unk> for those that are clinically.
Speaker Change: Acquiring that level of tailoring.
Speaker Change: Got it that's very helpful. Thank you very much.
Speaker Change: Your next question comes from the line of Craig <unk> Morgan Stanley. Please go ahead.
Craig: Yes. Thank you outside of semi Glu tide can you talk about just rough expectations for Liraglutide in terms of possible timing for this year and then also an update on the oral weight loss drugs you have mentioned on prior calls as well the 100 million run rate just.
Craig: Sustaining some of that momentum or whats the latest on the oral side.
Craig: Yes. Thanks for the question Craig we see the oral business continue to remain incredibly incredibly strong and so the guidance.
Expecting at least a $125 million.
Craig: The contribution from OE business.
Effectively excludes any contribution from the commercially available dosages.
Craig: Todd.
Craig: We set the guidance typically based upon what we have line of sight to today. There is a few things that we do know hold true and we've seen the oral business benefit as a result of it.
Craig: The first is.
Craig: We know that our subscribers value of that benefit the platform brings beyond the medication consumers.
Craig: Consumers are very motivated to lose weight and have a holistic platform to do so we also know that consumers are looking for help and treatments from platforms video trust. So those are the elements behind one of the reasons why the oral weight loss was able to scale so quickly.
Craig: We see continued momentum even when we had personalized our compounded.
Craig: Commercially viable doses of semi put it on the platform URL operate continue to remain quite popular.
Craig: Results of broader eligibility requirements as a result of.
Craig: Consumers has been candidly more and more comfortable.
Craig: With the modality.
So as we look to 2025 looks like we didn't expect.
Craig: Continued meaningful contribution from our oil business. We're excited for Liraglutide too to come later this year, we expect those to be foundational pieces.
The overall ecosystem for Norway.
Craig: Norway last specialty, but can be supplemented as Andrew mentioned.
Craig: By the subset of consumers for whom.
Craig: Our personalized messages compound semi retired are an effective solution for.
Craig: Got it and then just as a follow up on hers platform, reaching 30% of the business outside of <unk>. One can you maybe just give some color in terms of some of the key categories that are driving traction on the her side.
Craig: Yes, I think one of the things that we're seeing here is really benefit from.
Craig: First and foremost this is many of the learnings that we had around marketing effectiveness from him.
Craig: As well as strategies around personalization, we also brought over two to hers, but we also do see is that many of the categories for her as our visible nature. So things in dermatology that are inclusive of both skincare.
Craig: Skin care as well as pure loss prevention for women.
Craig: Incredibly popular and so that was one of our fastest growing specialties. We also as we've talked around at various points last year to your very successful mental health business, but its also driving underneath <unk> as well.
Craig: And then the full ecosystem of weight, we're seeing.
Craig: That gain traction across both <unk> and so really we're seeing a healthy composition across multiple specialty is driving the acceleration of <unk> and a large part of that is it's benefited from any of the learnings that we had on the hemp side being able to bring those over and drive faster acceleration to the Ruth's Chris brand.
Craig: Got it thank you.
Speaker Change: Your next question comes from the line of Eric Percher of Nephron Research. Please go ahead.
Eric Percher: Thank you.
Speaker Change: A question on the transition beyond commercial Semiclad tide.
Speaker Change: Maybe question what happens to the patients and subscribers currently on the commercial product how do you think about supporting them and what portion do you expect would be viable for personalization.
Yes, that's a great question Eric.
Speaker Change: I would suspect we will have to start notifying customers in the coming months into that they will need to start looking for alternative options on their commercial dosing.
Speaker Change: Obviously, we have the expansive platform, whether it's the oral medications.
Speaker Change: That are already out there or if there is some reason that this patient we qualify for some level of personalization that exists, but I would suspect just being very directed a lot of those patients will try to go into the open market and try to secure a branded option in some form factors. So.
Speaker Change: That transition is inevitable I think that transition is going to have to take place and has been built into the guidance.
Speaker Change: <unk> provided.
Speaker Change: And as you look out towards the end of the year. When you have lire and are building on personalization deal a feel for what portion of the weight loss population may be spread across those.
Speaker Change: I might also ask you I think we have $725 million as the goal. This year, we know $2 29 last year for <unk> 100 for weight loss can you help us on the equivalent or at least 100 for weight loss can you help us on the equivalent to that number of 795.
Speaker Change: Yes, I think we were.
Speaker Change: What we would expect as we as we look to the.
Speaker Change: At the end of this year.
Speaker Change: Given the fact that we.
Speaker Change: As I mentioned are.
Speaker Change: One of the platforms that have the ability to provide data insights to consumers. We also are trusted and affordable brand we.
Speaker Change: We did expect to see the oral based.
Speaker Change: Austin will be quite popular given the fact that.
Speaker Change: Many other platform as we will no longer be offering commercially available dosages of semi retired.
Speaker Change: We are likely to receive benefits from that across both of our specialty is on the oral side is both linaclotide and.
Speaker Change: And so I think that the competitive advantages that have served as the foundation for how we have been able to scale specialties in the past the trusted brand the value that we bring to consumers beyond the medication will be a critical component.
Speaker Change: Maintaining our existing ecosystem.
Speaker Change: Subscribers, but then also continuing to draw a broader set of subscribers to the platform.
Speaker Change: No. Neither one thing we talked about last last quarter I think is.
Speaker Change: Again, as Gary mentioned, the platform's capability to deliver a more comprehensive offering higher touch care increased personalization whatever the actual medications are is delivering what we believe is really fantastic resolved and so even when you think about the oral medications, which I think a lot of people forget that the category with that type of.
Speaker Change: Personalization that is delivering I believe we shared 10% weight loss at more than or less than half the cost.
Speaker Change: Semi blue time, right, both the commercial and the personalization and so I think there is there is a real group of.
Speaker Change: A real group of customers out there I think it's overwhelmingly the majority that is looking for handheld cure and we can help achieve weight loss in different ways and different mechanisms with different treatment, but I think that's why you're there is a strong degree of confidence in the delivery of that 700, plus this year without.
Speaker Change: The branded medications of the commercial doses, just because I think what we see under the hood as patients really need help they want to be cared for they want that high touch and Thats really what the platform is able to deliver for them.
Speaker Change: Thank you.
Daniel: Your next question comes from the line of Daniel <unk> of Citi. Please go ahead.
Hi, Thanks for taking the question.
Daniel: I just had a really a numbers question here on the <unk> contribution this quarter. So it seems like for the full year you.
Speaker Change: You guys did.
Speaker Change: Did you say $225 million or so of G. L. P. One contribution.
Speaker Change: In my model and in fact that could be off in my model, but I had you're doing around $75 million.
Speaker Change: <unk> and <unk>.
Speaker Change: So that would put the fourth quarter.
Speaker Change: <unk> revenue somewhere.
In that $150 million range, which would be a pretty nice step up quarter over quarter, but then it does also imply very limited or even.
Speaker Change: Declining sequential growth in non <unk> revenue from <unk> to <unk>. So just wanted to put a finer point on jumpy one contribution.
Speaker Change: The fourth quarter, specifically and then maybe if you can comment on the quarter over quarter trends in the non <unk> revenue. Thank you.
Speaker Change: Yes. Thanks, so much for the question, Dan So I think across the year.
Speaker Change: But on a full year basis as well as within quarters. The vast majority of that revenue is still coming in from the non <unk> related offerings.
Speaker Change: We still see that.
Speaker Change: The overall tenured specialties remain quite durable much of the increase and personalize subscribers and youre seeing that number drive north of 55%.
Speaker Change: That's driven in part by the.
Speaker Change: Continued a shifting of.
Speaker Change: Subscribers to those categories.
Speaker Change: So overall I think it's we're not necessarily speaking on a quarter to quarter basis.
Speaker Change: Sure.
Speaker Change: The performance out of specialty level, but we do see the overall core specialty is outside of <unk> remained quite durable as you start to bring on some of the capabilities that Andrew mentioned in his prepared remarks, such as lab tested and bring greater precision around personalization, but we do see.
Speaker Change: The ability for that to strengthen even further as we've seen acceleration in some of our tender specialties in the past.
Speaker Change: Okay. Okay.
Speaker Change: And then on.
Speaker Change: As we think about that $725 million of weight loss guidance for.
Speaker Change: This fiscal year.
Speaker Change: Im wondering if theres I don't know is there any way to partner with some of the branded companies out there.
Speaker Change: One of your competitors does have a partnership with Lilly on tours appetite vials I'm curious if you would pursue something on the branded side of <unk> ones outside of Liraglutide.
Speaker Change: Or are you going to stick with your knitting on what you've got currently.
Danielle: Thanks, Danielle Yeah, great question.
Speaker Change: We've spoken to both the leadership teams of Novo Lillian.
Speaker Change: I looked at the deal that ROE did with Lilly and really direct it.
Speaker Change: Not off the table right I think the branded medications without question and we see this on our platform today with branded viagra.
Speaker Change: Other branded products. There is a subset of people that always wants to get them I think right now what is challenging is twofold, one the actual reliability of sourcing those medication and not to be.
Speaker Change: <unk> kind of Snickering in here, but we still really can't actually source the branded medications from our pharmacies for our own platform and.
Speaker Change: And so there.
There is a limited supply in a way that prevents us from having any durable offering on the existing <unk> platform at the scale that we offer it.
Speaker Change: And for other players who have smaller scale, that's a different story, but that is still a challenge and then I think the other thing that is a challenge is just the reimbursement rates are continuing to go down.
Speaker Change: And so frankly the.
Speaker Change: The reliability that we can say to a patient that hey, youre going to have this price and here's a guaranteed kind of locked and experienced it.
Speaker Change: Crumbling a little bit and so I think we still need to see how that pans out from a customer relationship standpoint, we want to have consistency, we want to have price transparency like we've always talked about we want to have seamlessness and the current ecosystem across supply chain reimbursement rate cost.
Speaker Change: It just really doesn't hit those marks in any way yet.
Speaker Change: Hopefully those do change right because again as a platform that likes to be Switzerland, we benefit from having more offerings on the platform.
Speaker Change: And our patient also benefit so I think we're keeping our eyes open and see how the dynamics change and you always have a really open conversation with any.
Speaker Change: Any of those companies that can be helpful in getting more breadth to the platform for these patients.
Speaker Change: Makes sense. Thank you.
Speaker Change: Your next question comes from the line of Ryan Macdonald of Needham. Please go ahead.
Ryan Macdonald: Hi, Thanks for taking my questions Congrats on a great quarter as.
Ryan Macdonald: As we look at the GOP one business you talked about personalized in commercial can you give us a sense of what the rough mix is across that and then.
Ryan Macdonald: As you as we get past Q1 year is there any risk Brexit, whether it be from a legal or regulatory perspective.
Ryan Macdonald: Continuing to offer the personalized version in your view thanks.
Andrew: Maybe I can take the first part and then I'll hand, the second part over to Andrew to address.
Andrew: I think we initially launched the platform with just commercially available test, which is what we see in general in our platform as Andrew mentioned many of the folks that are coming to our platform.
Andrew: Have come in have had struggles with.
Andrew: With the ones in the past that was the Genesis behind on the reasons behind why we very quickly look to.
Andrew: The rollout.
Andrew: Personalized messages as well.
Andrew: So we see between that as well as the other benefits we offer in the platform the high touch provider engagement.
Andrew: Is it given the fact that many folks have already experience side effects concerns with the commercially available dosages.
Andrew: Majority of individuals on the platform.
Andrew: Today are utilized and personalized messages versus the commercially available dosages mentioned going to take the second part.
Speaker Change: Yes, sure, Yes, I think the regulatory framework for the allowance of personalization and actually what that means right. Maria question. The documentation the clinical necessity of it what the actual experience of it looks like what personalization means from a from an actual dosing standpoint, and a different from commercially available drug all of this is Barry.
Andrew: Clear and regulated and so.
Andrew: We play by the rules and the rules are quite clear and so I don't expect there to be meaningfully meaningful conflict. When it comes to the personalization standpoint, I think historically the <unk>.
Andrew: Broad industry.
Andrew: Inclusive of the pharmaceutical companies have recognized and respected I think the need for this type of clinical personalization of medications I think what they have always really had issue with understanding understandably just given the bottom line implications is the mass scale production during the 500 <unk> right commercial.
Andrew: <unk> production is.
Andrew: Something that they would prefer doesn't exist. It is again regulatory allowed.
Andrew: With that closing as a result of the shortage I think youll see a meaningful small meaningfully smaller number of players in market I think the necessity for kind of a high filter of who those customers are and what the experience looks like and how it's documented will be very important.
Andrew: Ultimately I think will be respected by by most of those industry leaders.
Speaker Change: Thanks, I appreciate all the color there and then as you think about the Liraglutide launch.
Speaker Change: More specifics you can give us on sort of what we should expect in terms of the timeline for when that will be become available on hands and then how are you thinking from a pricing strategy perspective for generic Lear Glu tide relative to the ranges that you have of oral that $70 up too.
Speaker Change: Compounded G. L. P. One at 165, how should we think about where that could come in the pricing range here. Thanks.
Speaker Change: Yes, it's a great question from a timing standpoint, I would expect some time mid year early second half of the year to bring that to market on the pricing side. Our ambition is always to bring this to market in the most mass.
Speaker Change: Mass affordable way possible.
Speaker Change: Now with Leer grew tired its a bit of a challenge because you have.
Speaker Change: More medication that's needed given at the daily injection versus a weekly injection you've got more sterile.
Speaker Change: Needles that are required on a weekly basis given this so everything from Rye API packaging is more expensive.
Speaker Change: I would suspect that theres going to be some.
Speaker Change: Some trickle down effect that resulted in us having.
Speaker Change: Kind of a similar price point to the commercial dosing in the couple of hundred Buck range.
Speaker Change: But again I think our ambition will always try to get to scale quickly negotiated either through our own.
Speaker Change: Third party partners or through the vertical nation of our own infrastructure to be able to then bring that price down over the coming year and bring it to people in a way that ultimately delivers great outcomes and I think with Liraglutide the base level.
Speaker Change: The base level of dosing has okay results compared to the newer generation GLC, one, but theres a lot of people that have very strong results. When you pair it with other treatments whether it's.
Speaker Change: Compounds on the oral side or healthy lifestyle or calorie deficit or even personalized doses of the <unk>. So I think we have a lot of excitement for that medication because.
Because we think it will be a nice thing to add to the Arsenal and be very successful for a certain group of people.
Speaker Change: Our last question comes from the line of Aaron Kessler of Seaport Research. Please go ahead.
Aaron Kessler: Hey, guys, maybe just on the kind of for the testing you can imagine in menopause testing as well as low tier where it's faster on them.
Speaker Change: Spot.
Speaker Change: Spot on timing potentially for that offering and then just maybe how to think about that growth versus revenue per staff for the year as well. Thank you.
Speaker Change: Yes, we're really excited about the whole buying testing.
Speaker Change: I think you'll you'll hopefully see us start to get that in the market in the first half of the year, but if not early second as well as we innovate integrate tri band and Thats going to really unlock not only more precise treatment.
Speaker Change: <unk> supplementation, but also I think multi condition treatments, because youre able to really start to get early biomarkers for things like metabolic disorders insulin resistance cardio.
Speaker Change: Cardiac disorders on the on the lipid profile side, So I think theres going be a real expansion opportunities there that can expand not only the number of customers are coming to us every day, but also just the stickiness of the relationship and then.
Speaker Change: I'll, let you speak a little bit on the second half.
Speaker Change: So on the second half we did do you expect continued expansion on revenue per sub.
Speaker Change: The pace of that.
Speaker Change: Depending on a few factors.
Speaker Change: One is just as Andrew mentioned as we start to rollout more multi condition treatments those.
Speaker Change: Those typically carry.
Speaker Change: A bit of a premium to the existing trends on the platform. So that will drive some expansion and as we see continued adoption.
Speaker Change: The oral as well as tied on the back half of this year.
Speaker Change: Some some extension in revenue per subscribers.
Speaker Change: The trial results.
Speaker Change: Alright, thank you.
Speaker Change: There are no further questions at this time with that ladies and gentlemen that concludes your conference call. We thank you for participating and ask that you. Please disconnect your lines.
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