TRANSCRIPT: Andrew Dudum (Ep 23)

Huge thank you to Hims founder & CEO Andrew Dudum for joining the podcast.

When we started Hims House six months ago, I never imagined we’d be sitting down with Andrew so soon. It’s a testament to the growth of the Hims House community — and, in turn, to the company Andrew and his team are building.

If you enjoy this conversation, please consider upgrading to a paid subscription - it helps us keep Hims House going and bring on more great guests.

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Jonathan Stern: Hims House Episode 23! I'm Jonathan Stern, and I'm here today with Patrick Lester, who goes by the name “Bayside” in the Hims House Discord. This is easily the most anticipated episode we've done, because we are also joined today by the CEO of Hims & Hers, Andrew Dudum. Andrew, welcome to the show.

Andrew Dudum: Happy to be here, guys. Thanks for having me.

Jonathan: Well, thank you so much for joining us. I think we have around 30 minutes, so I want to jump right in. The one thing I do want to say is thank you to all of the members of the Hims House Discord community who submitted questions. We're going to aim to get in as many of those as possible. Patrick and I have also prepared a few, but truly the questions from the community will guide the bulk of today's conversation. So thank you very much for those.

Let's start with an area that's generated some debate among analysts. There's concern that growth in the core business — that is, excluding GLP-1s or even weight loss entirely — might be slowing. Can you clarify the actual trajectory of growth that you're seeing in the core product set right now?

Andrew: Well, thank you guys for having me. And I'll say to the Hims House group, whoever is in this group, you all have some of the best questions out there. So if you guys are looking for jobs at major banks or anywhere, let me know. We could try to funnel you to the right place because in some ways, you guys have a more keen understanding of the business than many. So excited to be here. You know, I think the beautiful part about Hims & Hers, Jonathan, and to your question and probably the reason that I continue to run this business is you have the opportunity to build something that not only can transform tens of millions of patients lives, but actually under the hood, build something that's incredibly defensible as a business.

And a big part of that is the revenue composition of the business we have, as I think Yemi and I have shared a number of different categories growing at very different rates. You've got new categories like the obesity category, growing kind of off the charts, even pulling out commercial branded medications, the oral medications, personalization, those continuing to be huge contributors. You have categories like Hers dermatology, one of the fastest growing categories in the entire business.

The men's dermatology business, one of the fastest growing businesses we have on the men's side. And then you have core. What I would say is like legacy businesses like our original categories, men’s sexual health, things of that sort that are at real scale that are still growing, you know, 40+ percent year over year.

So I think those that are concerned about the core are probably just frankly overreacting to sensitivities around the weight loss business being a really huge catalyst for growth. And the natural question then is, okay, if weight loss is growing so fast and we're shifting attention there, what's happening to the core business? And, and what I would say is we feel very comfortable that the core business is at scale, is incredibly efficient and will continue to grow very robustly. And I think when you look at some of the innovation coming out of the core, the men's and women's dermatology treatments, the 2 and 3-in-1 treatments on the men's sexual health side, things like testosterone that just launched, cardiovascular support, multivitamin supplements adding to the prescription treatments within the core, we're just seeing deeper penetration and pretty strong attach rates.

So not a lot of concern from our standpoint. And I think under the hood, what gets me excited here is we're in such early days, you're just layering different cohorts of revenue on top of each other. And ultimately at a certain scale, some of the slower businesses that are the biggest kind of get to those large numbers, but no overall concerns on my end from that side of the house.

Jonathan: That's great to hear, Andrew. We had one question about GLP-1s. I'll turn it over to, I'll turn it over to Patrick for that.

Andrew: Only one, huh?

Jonathan: Take it away, Patrick. There might be one or two follow ups.

Patrick Lester: All right, so I feel like we're kind of starting this interview by addressing some of the concerns that we had. As you might imagine, Hims House is full of a lot of people who are enthusiastic investors of Hims.

And so a lot of the so called naysaying we hear is kind of from outside the Discord, but still important questions, so we're kind of channeling some of that. So I think we might be hitting you with some of the harder questions at the beginning, but it gets a lot easier.

So on this one. So Jonathan just asked this question about, you know, the concerns around the core. There is sort of match to that, this assumption that, you know, GLP-1s are really driving so much of the growth. And you really just answered that question. But one of the related questions to the GLP-1s is about this issue of the legality of the personalized compounding strategy when it comes to GLP-1s. There are a lot of concerns out there, including some in the investor community, others in the media, about whether or not you're operating within what's regulatorily considered appropriate.

So much so that I can tell you that I've actually done a legal analysis of this, speaking for myself and certainly in no way have no insights into what your strategy is, nor would I want to, but at least to allay some of those concerns. So I'm not going to ask you, nor would I expect you to answer any questions about the legal specifics. I'm going to ask you a much simpler question.

And this is really for the benefit of the doubters out there who are concerned about this. And it's just. Can you assure us that, yes, your team has done a deep legal review of this issue and all of the regulatory aspects and that your strategy reflects that review?

Andrew: That's a nice and easy one. That is for sure. I think Soleil, our chief legal officer, who used to work at Digital Health, Google and before that ran the healthcare practice at Jones Day, her whole career, would probably not be very comfortable if we were not in that position. But I'll take it even one step further, right.

I think we advocate on behalf of consumers rights as a business. We are probably the largest consumer centric healthcare company in the world. We treat 10 to 15,000 new patients per day. It's probably one of the largest healthcare systems in the country if you think about it from a scale standpoint. And we're the only one at that scale whose actual responsibility is to the end consumer. We take the consumer's payment and we are responsible for whether or not they're healthy or not. We connect them with the expertise, the provider and the empowerment. With that responsibility, I think comes our commitment to advocate on their behalf for what they are allowed to have access to.

During the duration of the shortage, they had legal access to commercial doses of GLP-1 medications. This is created not as a loophole, but intentionally by the FDA to actually allow patients to have redundancy in supply chain during shortage situations. So it's actually made by the FDA for this exact reason.

Anybody who is trying to instill fear about the legalities of that or the safety of that is simply, you know, is simply trying to muddle the waters. Now, post-shortage, the 503A exemption is very specific and very clear. And Deb Autor, who's on our board was the associate director of the FDA.

She wrote much of this legislation overseeing compounding for nearly a decade. Patients have access to personalization when providers find it is clinically necessitated. And that means that the personalization and the treatment they're receiving has to be different in a material sense. And how this is actually documented is often 10% or more different in dosing or form factor for the purpose of some type of clinical need, some need such that the commercial dose doesn't actually suffice.

Now, with semaglutide, we don't need to be the first to say this. The studies are out there and they're public. You know, about 70 or 80% of patients stop taking that medication within about 90 days. And a big part of that is because of muscle loss, sarcopenia, because of nausea and vomiting, and severe gastro issues. So our providers who have now treated across the platform tens of thousands of patients very naturally start to get to the point where they have patients experiencing these side effects and allow for personalization. That is by the book allowed through the 503A exemption.

And so we will continue to advocate for patients to have that right, not only because it is their right, but also when you look at this treatment in particular, there's no question to anybody, even for those patients who have taken this medicine, that these types of severe side effects actually result in you stopping taking the medication. And all of the studies support that. There's a Blue Cross Blue Shield study out there. About 10 to 15% of patients after the first year are still taking this medicine. And that's if you're talking about the commercial experience. With Hims & Hers, you're seeing probably double or triple that rate. So the clinical adherence probably twice or three times as good as what you're getting in the average market. And it's because of that high touch personalization and the ability to manage a patient's outcomes with side effect profiles in a way that actually is consistent with them.

So not only do we feel it is absolutely protected and actually legislated for this exact purpose, but it's also, I think, really important for us to speak up and allow patients to know that they have this choice and to know that the market, let the market know that this is a reality.

Jonathan: I think we got more than our money's worth there. That was terrific.

I said just one but small follow-up, which is it's been a month since the FDA has announced the end of the shortage. Is there anything you can tell us about what customers are saying now? Which products in the platform are they transitioning to? Have to assume some are continuing with the personalized doses, others are switching to oral. But what is your sense of what this looks like a month post-FDA announcement?

Andrew: Yeah, we're going through and people know this. It's happening on Reddit threads and everywhere, right. We are actively communicating to patients that if they are on a commercial dose, that treatment will be pulled from the platform.

I mean, if you look at our team. Soleil running the legal function, people like Dr. Toby Cosgrove on the board. Dr. Patrick Carroll, chief medical officer of Walgreens. We're as blue chip as it gets when it comes to playing by the rules. I think people like to peg David vs. Goliath, big pharma vs. small innovator disruptor breaking things.

And we are a disruptor in that sense. But the team is composed, including myself, of a team that does it by the book, does it by the right way, and does it the clinically accurate way. And so we are removing all the commercial doses from the platform.

New customers already cannot access those treatments. We are canceling subscriptions for patients on the commercial doses. For those that actually needed a personalized treatment that the provider prescribed, those patients are allowed to continue on the platform with that personalized treatment. And I think what you see is people are mixed in how they're going about it.

We are referring patients to other providers. We're referring patients to brick and mortar in some circumstance, patients are leaving and trying to find it through other avenues.

Many patients are choosing the oral medications, as you mentioned, Jonathan. The oral medications, I think a lot of people really underestimate the strength of that business. I know there's a lot of concern that I've seen around the 700 plus million dollar weight loss number that we put out this year because there are concerns that it's kind of too ambitious. The oral business is an incredibly robust business and it's for one very simple reason. You're getting 2/3 or 3/4 of the weight loss for 1/3 of the price. And you're not injecting yourself, you're not self injecting. It's very first principles. It's like I can take a pill and it's a third the price and it works almost as well. And I don't have to stab myself with a needle. Sounds good.

And so we see a tremendous amount of patients interested in that business. So I think to your point, Jonathan, patients will kind of approach it in different ways. Some will seek out the branded medication and we're bringing those to the platform for those that want those medications.

We also have shared that we'll be bringing liraglutide to the platform very shortly, which I think will be an offset for many of those patients. But ultimately they're going to have to find a new home if they're looking for the commercial doses.

Jonathan: Did you want to jump in with, with one more, Patrick?

Patrick: Yeah, Let me ask a really quick one. I don't mean to take you down a rabbit hole in this.

Jonathan: Yeah, this could be just a couple words.

Patrick: Not looking for a lengthy one because we've got other questions we want to get to. So a couple of years ago you said on one of the earnings calls that you had considered whether or not to get into insurance coverage for some of the work. You decided to back away from that, it didn't necessarily make sense due to deductibles and things of that nature.

So you stuck with your current cash based model. Any consideration with respect to GLP-1s alone given the high price of the commercial versions of that drug?

Andrew: No. No. I think we believe that in the next few years, not only looking at the portfolio of options out there, semaglutide, tirzepatide branded, you've got companies like Viking Therapeutics, you've got other businesses bringing other GLP-1s to market. Great options. We think in the next three to four years, especially once you've got semaglutide coming off patent, probably 2030 or whatever that is, there's going to be a great supply of great access to treatments at affordable, simple cash pay prices. It might take a little bit of time to get there, but I think that future is very much in motion.

Jonathan: Great. Let's pivot to the macroeconomic environment. Back in 2022, I think it was, there were concerns that the macro was deteriorating. But you described the uncertainty as actually an opportunity for hims. Your competitors pulled back and you took market share. Today, of course, some of those same fears are resurfacing. So I'm curious, what do you say today? Do you see the macro environment as more of a headwind or a tailwind for the Hims business?

Andrew: I think when there are turbulent waters, the best management teams and the best companies ultimately take share. I think generally that's what happens.

Companies and teams that have prepared themselves, that have strong fundamentals, that have cash flow, that have efficient business models under the hood, that can be proactive and nimble and pivot and quick and take action when they see opportunity. Generally speaking, I think those types of teams are able to move aggressively and swiftly and take share in very turbulent situations where you have dynamics in marketplace, maybe it's marketing efficiency, to your point, Jonathan, maybe it's regulatory questions, whatever it might be.

So I think we're a team that has been through a lot together. You know, my team is not new working together. Soleil has been with me, I think, six or seven years. Melissa, our COO, seven years. Mike, I think growing on four or five years.

This is a group that has worked very well together for a very long time, has seen the stock shoot to the moon and then drop to $2.97. And through all of that, has stayed focused on building a better and better business for these consumers. So, you know, I think it's a group that looks at turbulent times as an opportunity to be proactive. So I don't get concerned about, you know, state of the consumer.

I don't see that trickling down into our business in any possible way. And I think ultimately it probably means that the cream will rise to the top across industries.

Jonathan: Appreciate that answer and want to touch on policy briefly. I'm going to turn it back over to Patrick for that.

Patrick: All right. We could probably do a whole podcast on politics and public policy, but we'll keep it short.

So I'm a lobbyist who works on HHS issues. I know I'm interested in policy for obvious personal and professional reasons, but I think it's a broader interest for the investment community, too, especially when it comes to Hims, which is involved in any number of interesting policy areas. So here's what, to me, seems like the obvious question.

What can you tell us about your philosophy on engaging with the current administration? And just a little extra color on that? Then I'll turn it over to you, are there certain issues may maybe international trade issues or maybe RFK's Make America Healthy Again efforts that are possible areas of common ground where you could potentially work together?

Andrew: Yeah, my general philosophy on working with any administration is that it's necessary. It's absolutely necessary. We are responsible for the care of over 2 million patients every single day. We need to be able to have honest conversations with policymakers, with the administration, about what our customers value and what we think Americans value and figure out how to protect or expand those rights. I have been very energized, I would say, by the administration's focus on first principle thinking in health care.

I don't know if I speak across all avenues of the administration, but when I look at what they're doing in health care, Bobby Kennedy's focus on getting high fructose corn sirup out of the food supply of our kids, removing dyes from food, looking at European standards of health and trying to figure out why the US is so much behind. This resonates with me at a first principle level and as a father. I see these things and it makes sense. I think their push on healthy living and MAHA over prescribing of pharmaceuticals, I think makes complete sense. I think get outside vitamins, get some sun makes sense. These are ways I live my life. These are, these feel very obvious.

So I think what is exciting to me is that the healthcare team coming in is one that is clearly not entrenched in politics. They're not entrenched by the institutional systems, the major players, the insurance companies, the pharma companies, the FDA, all that. They're willing to shake it up, and they're going to shake it up. And so far it feels like they're shaking it up on behalf of actual people's benefits.

And that I think is very, very exciting because when we think about Hims & Hers and we think about the things that matter to us, we think about access to people, right? We want people to have access to treatments. We want it to be affordable for them. We want them to have choice. We want them to have flexibility in their treatment. We want our facilities and our infrastructure to be able to innovate for these patients. We want to be able to use AI to allow the providers to make smarter decisions.

We want all of this on behalf of the customer. And I think this administration is one that is willing to listen to that. And so I think that is very, very exciting.

Jonathan: We've talked a lot about the state of the business today. I want to move to the future of Hims & Hers. On your recent earnings call, you positioned Hims alongside — I love this, it was among my favorite parts of the call, actually — you positioned Hims alongside Amazon, Shopify, Uber, PayPal and Netflix. Businesses that reshaped entire industries despite skepticism from Wall Street pretty much all along the way.

To me, two key points really stand out. Number one, historically Wall Street has a weird habit of doubting revolutionary companies along their journey. And number two, you believe that Hims deserves, or will deserve, to be mentioned alongside Amazon and Shopify and Uber and Netflix in the future. If we were to think about Hims through this lens, what specific major opportunities do you see for the company over the next 5-10 years? Maybe especially those that investors may currently be under-appreciating.

Andrew: Yeah, I think for a long time people didn't recognize what we were building at Hims & Hers. It's a normal course of ignore, make fun of, fight, copy. The sequence of competitive ecosystems. And that's what happened. People ignored us. We were selling, you know, Viagra on the Internet. And that's silly and stupid and not that interesting.

And oh, now it's also dermatology.

Oh, there's a women's brand and it's birth control. Still don't think much of it.

And then I think you see Amazon take the model, try to copy it identically. Optum, United trying to do the exact same thing. Pfizer's Direct, Lilly's Direct, Novo Cares Direct. The model of consumer centric healthcare is obviously the future model.

And when I think about those other companies that you mentioned, the things that come to mind are on-demand, price transparent, personalized, mobile centric and empowering to the customer. The customer has choice in all of this.

And in every single industry in the US, that has taken place, the consumerization of this has taken place with some type of disruption in the last decade, except for health care. And it's freaking crazy. It's crazy. It's the thing we care about the most. It's the thing that has the most impact on how we live our lives. It's the thing that is the most emotional to us. And it's also the thing we spend the most money on.

And it's the only industry in the country where everybody is making money. And it has nothing to do with how you feel as a customer and whether or not you want them to make money.

And I don't think you're going to get a great experience and a great vision and a great outcome in healthcare until you build a system that actually aligns those incentives. Where we only make money as Hims & Hers when you as the patient are happy, if you're not happy, if you're not feeling better, if you don't feel taken care of, if you don't think it's worth it, you just cancel. And when you have that type of alignment, we're going to do everything possible as a company to make sure you're getting the most value as you possibly can and you're feeling the best you possibly can. And that's going to push us to innovate on your behalf.

So what you'll see from us in the next 10 years is more innovation on behalf of the consumer. You'll see broader selection of categories, new categories like pain management, like sleep, like hormonal balance, testosterone therapies, perimenopause, menopausal therapies, longevity, cardiovascular preventative care, diabetes preventative care. When you think about all of what I just said, you pretty much make up about 80% of the reason people die in the US.

It is healthcare. It is the majority of healthcare. And I think you're going to see us continue to broaden the categories and also go much deeper within each to be able to build much stronger relationships with these customers. So when I think about those companies, I'm always kind of going back to the consumer centric words, right? It's beautiful, it's personalized, it's on-demand, it's affordable, it's mobile centric.

And that's what we're going to build. We're going to build that exact type system. Now I think what's, what's funny is people are starting to just realize the associations with those companies.

But I think it's pretty clear to me. And I'll give you like the Netflix example. I think about this all the time.

GLP-1s — probably the biggest cognitive distraction you could imagine when you are looking at just the core Hims business today, because it's a front page of the New York Times Distraction. People are so excited about these medicines and they should be. They're very, very powerful medicines. But people are living and dying on whether or not Hims will survive as a business based on GLP-1s. And it's a little bit like in the 90s when Harry Potter books came out and everyone, all the analysts were obsessed with whether or not — in the early 2000s — whether or not the Harry Potter book was going to land on Amazon in this quarter or next quarter because it's going to move the numbers so much.

And it's like, well, what you're really missing, everybody, is that it's Amazon being built, not this Harry Potter book, and what's happening right now is you've got a blockbuster movie that is coming out (these GLP-1s) and they're refusing to stream on Netflix, right? And all the customers want it to stream on Netflix because it's easy and amazing and they love it and they use it and the industry is saying, no, we're going to push it through the theaters, we're not going to stream it on Netflix. And everyone's distracted by that.

But what they should really be focusing on is that there is a Netflix. There's a consumer centric platform that customers are loving and they're yearning for these types of experiences and treatments and opportunities.

And so over time, I think that will be more clear. You know, more books, more bestsellers will come on to Amazon, more Hollywood movies will come onto Netflix. And I think the strength of the platform will emerge past any one of these up and down moments.

Jonathan: I just have one follow up. You said many people are beginning to wake up to the idea that Hims might be like Netflix. Was this always obvious to you, Andrew? I mean, when you were cooking up Hims & Hers with Jack Abraham, is this how you thought about the company six, seven years ago?

Andrew: We always knew from the very beginning of this company that owning the customer relationship in healthcare would empower us as a company to continue to create more value and take more value from the system. Expand the pie. Because for all of these businesses, that's what's critical. You own the customer trust. We help them navigate their care, we help get them the best solutions. But ultimately they rely on us and we rely on them. And that relationship from the beginning was pivotal.

And it's why we didn't work with insurance. It's why we built our own affiliated pharmacies. It's why we verticalized our own infrastructure. To be able to deliver something that was so affordable and efficient and something we stood behind that patients would pay us directly. So I think that has been really consistent.

Jonathan: I want to finish on an upbeat personal note, if that's okay. You recently started a donut shop in San Francisco called George's Donuts & Merriment. Can you tell us a little bit about the name of the shop and why you decided to start it?

Andrew: Definitely. Yeah. That's a confusing one, maybe for some. I'm the grandson of all immigrants. And so there's a ton of immigrant grit in my family. And my grandfather, who's still alive, George, he's about 95, ran a laundromat in Oakland, California for about 40 or 50 years. And we grew up hanging out of this laundromat.

And right next door to laundromat was a donut shop right on Lakeshore Ave in Oakland. And we just had so many memories going to this donut shop, being with family, being with our grandparents, that for the last 10 years our family has always thought how fun it would be to do something in honor of them and something really special to bring the community together.

So we opened up George's, which is an all day cafe donut shop. It's probably the fanciest donut shop you'll ever see, but it's still just selling $3 donuts. And we've got portraits of my grandparents on both sides in king and queen regalia, kind of making them nice and famous to honor a fantastic two individuals and two mentors of ours.

Jonathan: Thank you for sharing. That's really cool. There's been some chatter in the Him's House Discord community about the donut shop. So I wanted to ask. Some people have said if the share price reaches a certain level, we might all take a trip to George's in the future.

Andrew: I would love that. I would love to host you guys there for a day at the donut shop.

Patrick: That's great.

Jonathan: Well, Andrew, thank you so much for coming on the show. We will no doubt be following your progress in the coming months and years. And I hope we can do this again at some point in the future. Thank you so much.

Andrew: Thank you for having me, guys.