Q1 2024 Hims & Hers Health Inc Earnings Call

Participants

Bill Newby; Head of IR; Hims & Hers Health Inc

Andrew Dudum; Chairman of the Board, Chief Executive Officer; Hims & Hers Health Inc

Oluyemi Okupe; Chief Financial Officer; Hims & Hers Health Inc

Allen Lutz; Analyst; BofA Securities

Maria Ripps; Analyst; Canaccord Genuity Inc.

Daniel Grosslight; Analyst; Citigroup Inc.

Jack Wallace; Analyst; Guggenheim Securities, LLC

Jonna Kim; Analyst; TD Cowen

Aaron Kessler; Analyst; Seaport Global Securities LLC

Glen Santangelo; Analyst; Jefferies LLC

Jailendra Singh; Analyst; Truist Securities, Inc.

Korinne Wolfmeyer; Analyst; Piper Sandler & Co.

George Hill; Analyst; Deutsche Bank AG

Presentation

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Hims & Hers First Quarter 2024 earnings conference call. Please note that this call is being recorded and 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, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one a second time. I would now like to turn today's call over to Bill Newby, Head of Investor Relations. Please go ahead.

Bill Newby

Good afternoon, everyone, and welcome to the Hims & Hers Health First Quarter 2024 earnings call today after the market closed, we released this quarter's shareholder letter, a copy of which you can find on our website at investors dot Hanes.com. On the call with me today is Andrew Dudum, our Co-Founder and Chief Executive Officer, as well as Yemi Okupe, our Chief Financial Officer.
Before I hand it over to Andrew, I need to remind you of legal, Safe Harbor and cautionary declarations.
Certain statements and projections of future results made in this 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. We take no obligation to update publicly any forward-looking statement after this call, whether as a result of new information, future events, changes in assumptions or otherwise. Please see our most recently filed 10 K and 10 Q reports for a discussion of risk factors as they relate to forward-looking statements.
In today's presentation, we 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 at investors dot homeinns.com. After the call this webcast will be archived on the website for 12 months.
And with that, I'll now turn the call over to Andrew.

Andrew Dudum

Thanks, Bill.
Our first quarter results marked an outstanding beginning to the year. The momentum we built in 2023 is continuing as we further advance our mission to help the world build great for the power of better health, the underlying strength of our business is propelled by an unwavering dedication to delivering the highest quality personalized care possible across each of our five core specialties, men's and women's dermatology, mental health, sexual health and weight loss. Strong execution of our strategy is drawing more consumers to our platform than ever before translating into robust financial performance. In the first quarter, subscribers grew by a record 172,000 quarter over quarter to over $1.7 million. Personalization continues to resonate with users. The number of subscribers opting for personalized subscription has nearly tripled over the course of the last year to north of 600,000 subscribers, representing just over 35% of subscribers on the platform. Our ability to efficiently acquire and retain users resulted in revenue increasing 46% year over year to $278 million, while also generating $32 million of adjusted EBITDA. We believe that our expanding portfolio of personalized solutions, combined with the ability of our brand to reach and resonate with consumers at multiple stages of their health and wellness journeys are driving forces behind our continued success. I'd like to start by providing additional insight into how we see each of these evolving across the year. Starting with our portfolio of personalized solutions, we leverage hundreds of thousands of interactions on our platform to facilitate an understanding of key consumer concerns and challenges that may prevent individuals to reaching optimal outcomes, partnerships with leading medical institutions and experts within each of our specialties then enable us to provide access to tailored clinical solutions that are crafted with a focus on safety efficacy. The top concerns identified by our customers this allows providers on our platform to meet their patients' clinical needs at an individual level, targeting things like side effects and adherence through personalized dosages, a variety of product form factors to drive adherence and the ability to address multiple health conditions with one solution. Our infrastructure and scale provide us the ability to equip providers with the breadth of personalized treatment options at mass market prices, continued expansion and refinement of our personalized portfolio will be a critical component behind our success in 2024 and beyond in areas like weight loss and dermatology will aim to improve the customer experience with more user friendly form factors and eventually a broader selection of multi action offerings.
Just as with Harvard Mintz and heart health, our upcoming offerings will be focused on various customer needs and use cases across demographics through tailored treatments.
Our recent launch of six RX plus Climax control is a great example of this type of innovation, a two-in-one offering designed to help men address multiple aspects of their sexual health without the need to take multiple pills in the coming years. We expect the vast majority of our subscribers will be utilizing one or more of our personalized offerings. Our brand has historically played a critical role in our success and early on in our Company's lifecycle we built trust and awareness with our customers by making conditions more approachable and driving awareness of these solutions. Traditionally, these efforts were targeted at consumers that were already being impacted by condition within one of our specialties. Our aspiration is to make Hims & Hers synonymous with high quality, personalized affordable solutions. And as part of that ambition, we started to focus efforts on reaching consumers earlier in their journey with a narrative that resonates in recent years, we have significantly increased our investments in channels that enable us to reach a broader set of consumers at different phases of their journey with the condition. This includes TV and other brand campaigns aimed at consumers during the most culturally relevant moments across society. These efforts are not aimed at immediate user acquisition. Rather, they're centered on raising awareness of our brand and platform capabilities early in an individual's journey with the condition sometimes even before those journeys formally begin a multi-specialty platform enables us to do this in an efficient manner as we're able to speak to consumers broadly about a platform of capabilities versus an individual condition. It is clear to us that these efforts are starting to compound. We are seeing users actively seek us out either by visiting our website directly or through other cost-effective channels. We believe this is happening as users associate the Hims & Hers brand with the treatment of a breadth of conditions and are seeking treatment on our platform, either the result of recalling prior messaging that they saw or increasingly through word of mouth from friends and associates. The growth and efficiency gains we saw in the first quarter are a direct result of these improving dynamics and solidify our conviction in our ability to achieve our long-term adjusted EBITDA margin targets of 20% to 30%, while simultaneously maintaining an attractive growth profile. This is an incredibly exciting time for our business in a very short period. I believe we have established Hims & Hers as the clear leader for accessing high-quality, personalized care and the efficiency gains. We are seeing throughout our model, ensure we can continue to build upon that position for years to come through our three underlying components of this model that allow us to bring this differentiated value proposition to market. First, our technology platform, which serves as the backbone of our innovation process and allows us to seamlessly integrate structured data and direct feedback from both consumers and providers offering invaluable insights into our user preferences and needs. This provides us with critical insights into customer behaviors, why users adopt certain solutions, why they may switch to another and why they adhere to particular products. Importantly, we also recognize the sensitivity of this data, and we take significant steps to prioritize customer trust and safety through our commitment to data privacy and security compliance with applicable privacy laws and transparency about how we use data.
Second, our team of internal medical experts oversee this entire process with expertise across each of our core specialties. These individuals help ensure that each offering aligns with the highest standards of clinical excellence. And finally, our affiliated pharmacies help ensure that every step of production from formulation to packaging uphold the integrity of our brand and meets the exacting standards of our customers. This enables us to offer access to a wide array of personalized solutions solutions that historically were only available to the wealthiest segments of society at truly accessible prices. Investments across these key pillars are fundamental to our ability to meet growing demand we are experiencing and fuel future growth in the near term. This means additional investments in our affiliated pharmacies enhancements in both breadth and capacity will position us to further accelerate market penetration while ensuring a best-in-class experience for our customers through the integration of robotics and specialized software, we aim to build the necessary infrastructure to bring our unique offering to tens of millions of individuals. These investments will allow us to continue deploying a strategy that focuses on offering a diverse range of solutions that our providers can use to effectively meet individual needs. As we expand these capabilities, we are thrilled to announce that several new and exciting solutions will be launching on our platform in the coming weeks. I look forward to sharing more details as these solutions become available later this quarter.
Before I close, I want to thank our teams for their outstanding levels of execution to start the year. We have created a platform that delivers a seamless and comprehensive customer experience by providing an expanding portfolio of personalized solutions at compelling prices. I take extreme pride in how we serve our customers and look forward to extending this experience to an ever-growing audience in 2024.
Before passing to Yemi, I'd like to reiterate a clarification. I shared yesterday. The last few days have been a disheartening reflection of just how device at a time we live in and my words have been misconstrued by some I in no way condone nor support acts or threats of Highlands, Antisoma tourism or intimidation. And there's absolutely no justification for violence on our campuses. Every Student deserves to feel safe without fear of harm or being targeted for who they are. I am deeply saddened that my support for peaceful protest has been interpreted by some as encouraging violence, intimidation or bigger tree of any kind. I do believe deeply in the right for people to use their voices in peaceful protests to drive change this right is critical to our democracy and must be protected. Our world today is more just because students throughout history have courageously taken to their campuses and use their voices to force change. Generations of Americans have engaged in non violent protests, and these movements have led to some of the most important changes in our country's history as a father whose children are both the Descendants of Palestinian refugees who fled the knock by in 1948 and the Descendants Apollo cost survivors from Poland.
As I've previously shared, I have a personal appreciation for the different perspectives. People have which I live with daily at my dinner table, I hope and pray for peace and for an end to violence everywhere with that, I will pass it over to Yemi to walk through our financials in greater detail.

Oluyemi Okupe

Thanks, Andrew. I will start by providing an overview of our first quarter financial performance and then discuss our updated outlook for 2024. 2024 is off to an exceptional start. Our position as a leader success in high quality personalized care has never been more evident and we are seeing cascading improvements throughout our business as more and more individuals find success on the Hims & Hers platform. We believe we are just scratching the surface of what our platform can do and the number of individuals we can help continued robust momentum in the first quarter serves as a confirmation of that revenue grew 46% year over year to $278.2 million. This growth was driven by the ongoing expansion of our subscriber base. Subscribers grew 41% year over year to $1.7 million. The first quarter represented a record level quarter over quarter subscriber additions on our platform as we added 172,000 net new subscribers. Our strategy of equipping providers with high-quality personalized solutions at mass market prices is a significant driving force behind our success in just two years. The number of subscribers that have opted for a personalized subscription has increased over six times to north of 600,000 subscribers. With this continued transition, we believe several benefits will emerge in the future. The first is improved retention. We are receiving signals across several specialties that retention for personalized products is higher alongside a stronger user preference for them relative to generic alternatives. This has not come as a surprise to us as feedback from user interactions and behavior is one of the key ingredients in development of our offerings. We expect continued placement of personalized treatment options at increasingly mass market prices to compound this benefit. Secondarily, we see opportunities for improved efficiency. Benefits from economies of scale with our personalized offerings are expected similar to what we have observed in other areas of our operation in the past, we are confident that these benefits will compound as we continue to extend our portfolio of personalized offerings over the course of 2024. Margins remained robust as we continued to leverage strong execution with economies of scale. Gross margins expanded two points year over year in the first quarter to over 82%, relatively flat when compared with the prior quarter. Our team continues to leverage affiliated pharmacies and other areas of our network to drive efficiencies across key costs such as logistics, raw ingredients and customer support. We continue to experiment with the highest value ways to pass this value to our consumers, and we are excited to continue to enhance the value they receive in the future. As our platform scales, we continue to see G&A leverage. G&a improved four points year over year to 12% of revenue in the first quarter. Costs as a percentage of revenue associated with operations and support as well as technology development were both relatively flat on a year-over-year basis at the foundation of the Hims & Hers platform as a delightful end-to-end experience for our consumers across multiple specialties. We believe we can continue to drive robust growth with personalized solutions through.
Firstly, joining a broader audience of consumers impacted by condition to seek treatment. Secondarily, attracting a greater share of users currently seeking treatment within the specialties, Hims & Hers covers, and lastly, increasing the longevity of the users on the platform, a multi-specialty platform with unique personalized offerings and a compelling and an experience has provided us with increased confidence to invest in reaching users early in their lifecycle journey.
As Andrew mentioned, our aim over time is to make Hims & Hers synonymous with high quality personalized solutions. In the first quarter, we saw meaningful benefit from reaching a broader audience with a compelling experience and suite of offerings. Marketing as a percentage of revenue improved more than 400 basis points on both a sequential and year-over-year basis in the first quarter to 47% stronger retention combined with increased acquisition of users through lower cost channels drove leverage. We are pleased to see this amount of leverage during a time of robust growth and record level additions of net new subscribers because it serves as a proof point of our ability to maintain strong growth while driving leverage. Our expectation is that we will continue to opportunistically utilize marketing as a discretionary lever to continue to reach consumers at various points in their journeys, ensure awareness for unique value propositions and capabilities in the platform as they emerge and accelerate awareness for newer personalized offerings. As a result, we expect there to be some fluctuation in marketing levels on a quarter-to-quarter basis as we utilize and marketing as a discretionary lever to drive the aforementioned goals. However, we have high conviction in our ability to drive one to three points of leverage per annum and achieve our North Star adjusted EBITDA margins of 20% or more no later than 2030. Strong execution and adherence to the principles behind our capital allocation framework are driving record profitability levels. Adjusted EBITDA in the first quarter was $32.3 million as adjusted EBITDA margins expanded over three points quarter-over-quarter to close to 12%. Net income was $11.1 million in the first quarter, up almost 10 times from last quarter, elevating our conviction that 2024 will be our 1st year of profitability before providing additional insight into our outlook for the remainder of the year. I'd like to drill into how we allocated capital in the first quarter and our guiding principles for the remainder of the year. Free cash flow generation continues to remain strong we generated $11.9 million of free cash flow in the first quarter as cash flow from operations exceeded investment in fixed assets within our affiliated pharmacies of $10.6 million over the course of the first quarter. We saw what we believe to be a meaningful disconnect in our market value relative to our intrinsic value. We believe this was the result of a natural shareholder rotation, driven primarily by members of our pre IPO shareholder base as well as general market volatility. We repurchased approximately $2 million shares in the first quarter. As a result of these dynamics at the end of the first quarter, $20 million remain within our $50 million share repurchase program. As a result of these actions, cash and short-term investments decreased by approximately $17 million in the first quarter. As of the end of the first quarter, $204 million of cash and short-term investments remain on our balance sheet.
Looking forward, our priority for capital deployment are as follows. Our highest priority remains around positioning our business for growth. We expect meaningful deployment of capital in our affiliated pharmacies over the course of the next three years. Consumer feedback has been resoundingly positive, and we expect future investment will enable us to continue expanding the breadth and capacity of personalized offerings across each of our five core specialties. Our aspiration is to have tens of millions of subscribers on our platform, and we expect the majority will subscribe to a personalized solution. Additionally, our scale allows us to make positive ROI investments in our facilities that we expect will increase our ability to offer solutions to consumers at mass market prices. These investments can come in the form of automation as well as incremental operations in logistically advantageous locations.
Our next priority is capitalizing on a moment when we feel there are meaningful disconnect between our market value and intrinsic value with the repurchase of shares.
Lastly, we will continue to take the opportunity to utilize our cash flow generation profile to further strengthen our balance sheet. We believe this will provide additional option value for opportunities in the future. We are grateful and confident that the strength of our balance sheet and cash flow generation profile will enable us to do each of these things in the coming years.
Concurrently.
With that backdrop, I'd like to detail our updated outlook for 2024. In the second quarter, we are anticipating revenue in the range of $292 million to $297 million, representing a year-over-year increase of 40% to 43%. We expect adjusted EBITDA to be between $30 million to $35 million, representing an adjusted EBITDA margin of 11% at the midpoint in both ranges for the full year, we are anticipating revenue of between $1.2 billion to $1.23 billion, representing a year over year increase of 38% to 41%.
Lastly, we expect 2024 adjusted EBITDA will be between $120 million and $135 million. These adjusted EBITDA and revenue ranges imply an adjusted EBITDA margin of 10% at the midpoint of both ranges. Strong momentum in the first quarter has strengthened our conviction that we will exceed not only our bottom line, 2025 targets a year early, but our revenue targets as well. Our ability to concurrently drive record growth while achieving meaningful levels of marketing leverage reinforce our conviction in reaching our goal of long-term adjusted EBITDA margins, north of 20% by 2030. Our ability to drive these incredible results would not be possible without the dedication of hundreds of employees across Hims & Hers. I'd like to thank them as well as our customers and partners that support us in our mission of helping the world of breakthrough the power of better health. We appreciate the support of our shareholders and look forward to keeping you updated on our progress.
With that, I will now turn it over to the operator for questions.

Question and Answer Session

Operator

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again, if you are called upon to ask your question and are listening via loud speaker on your device, please pick up your handset and ensure that your phone is not unmute when asking your question again, please star-one to join the queue.
Your first question comes from Allen Lutz with Bank of America. Please go ahead.

Allen Lutz

Good afternoon and thanks for taking the question. Andrew, you mentioned that consumers are seeking out Hims and the way that you framed it and made. It seem like this is really the first time that you're seeing such significant efficiency gains. I guess as we think about this in the context of the 2024 guidance, did this come to a surprise to you in the quarter. What do you think is driving this? And then why is it happening now? And I guess as we think about the marketing as a percent of revenue. Clearly there was a nice step down there. Just trying to think through if what we saw in the first quarter is sustainable.
Thanks.

Andrew Dudum

Thanks, Allen. Great question. Maybe I'll take the first part and let Yemi hit the second. I think what's been happening in the past quarter is a continuation of the last couple of quarters, which is as we've expanded the suite and portfolio of personalized products across the categories, both historical core categories and some of the newer ones like weight loss and women's Dermatology and that's just bringing a much more diverse set of customers to the company, right? We are getting better at segmenting the types of people that live within each of these categories and offering products that are maybe of countering concerns they otherwise had and otherwise were barriers for them adopting treatment. And so I think as we continue to increase the breadth of choices, you're going to see a continuation of people coming to the platform. I think on top of that, which has added extra leverage, we continue to increasing increase the accessibility of those personalized products right we're dropping prices strategically, these are very mass-market, attractive products and attractive prices that are often compared to the traditional generic treatments, price essentially side, the sell side to side and so the combination of the personalization and the attractive price point, I think is something that's just been growing. And from a continuation standpoint, I think generally those trends are to be expected Alan, because we continue to expand the portfolio. But I think there are also dynamics from a marketing leverage standpoint that Jimmy can speak to with regard to when we push a little bit heavier and when we pull back.

Oluyemi Okupe

Yes. Thanks for the question, Allen. I think the way that we think around it is there will be periods of time where marketing will fluctuate from time to time. We'll use it as a discretionary lever to lean into a variety of different initiatives, whether it's a new category launch or the launch of a new personalized product. But as we mentioned in the prepared remarks, over the course of like on an annual basis, we do see the ability to continue to gain leverage just as a result of more and more consumers coming to the platform are loving the product's been on the platform for a longer period of time as well, as Andrew mentioned, more consumers coming to us organically. And so that gives us the confidence that, yes, each year over the course of the coming years, we have the ability to get leverage and at the same time currently maintain growth.

Andrew Dudum

Very helpful. And then just a quick follow-up on the personalized solutions. I think yemi you mentioned 35% of subscribers are now taking personalized solutions today. How should we think about the size of the retention improvement from maybe where the Company was a couple of years ago versus what personalized solutions are doing currently? Is there any way to frame the improvement quantitatively?
Thanks.

Oluyemi Okupe

Yes, I think we can give you some guiding principles around what we've been seeing across categories. I think various categories are at different stages in their lifecycle probably. But we do see that personalization for personalized solutions enable us to do a few things. One is just given that there are not somewhat similar products often cases in the market out there to them. We are seeing more and more consumers sign up for not only the personalized products, but also sign up for them at longer durations and given the fact that many of these products do fundamentally go to the heart of consumer preferences and consumer needs, our belief is that these will be the catalysts that enable consumers to stay on the platform for years or even decades. And we're starting to see that show up across many specialties in the form of much stronger retention that we've seen of the generic alternatives. And I'm not sure if there's anything you wanted to add there as well.

Andrew Dudum

Yes.
The other thing, Allen, just maybe to give you some color on on how this plays out. A lot of customers will cancel overwhelmingly because the treatment itself is not perfectly personalized to that, right. Maybe the form factor is not a form factor that they love using, right? Maybe it's a topical spray and it makes their hair sticky. And so they perform and they prefer an oral solution or maybe vice versa or there might be a side effect component, which is common among different treatments that the customer is trying to balance. And so I think the way you can think about it is that we like to dive deep into the data of understanding why customers are canceling and tried our best to address them directly with the next level of personalization launches. And so very often they are directly attacking some of the side effect concerns that we see or some of the form factor concerns we see, et cetera. And so on probably can't speak to that magnitude, but definitely something that we've seen pretty consistently and would expect to continue.

Allen Lutz

Thank you.

Operator

Your next question comes from Maria Ripps with Canaccord. Please go ahead.

Maria Ripps

Great.
Thanks so much. For taking my questions and congrats on the strong quarter. But first, I just wanted to ask about your pricing philosophy or it's been about a year since you sort of introduced lower prices. Can you maybe give us a little bit more color on your sort of near term approach to refining pricing from here? And are there any sort of specialties or maybe products where you've seen particularly higher sort of price elasticity?

Oluyemi Okupe

Yes. Thanks for the question, Maria. I think just our fundamental approach is as we continue to see benefits for scale we're consistently running experiments.
Yes, with respect to how do we pass forward some of that value back to consumers, which we feel will increase the longevity on the platform. I think with respect to on some of the pricing dynamics, we've had a lot, many of those on the Q2 in the Q2 quarter. And so we expect to see the benefit from that in the second quarter. But that said, I think that's the way that we'll pass value to consumers is not just in the form of price. You can expect additional features or other other creative solutions that we're experimenting. And so I think over the course of the year, embedded in our guidance is the flexibility to do that. Whether it's with respect to pricing or incremental features that consumers debt really with an eye towards addressing their needs and keeping on the platform for longer.

Andrew Dudum

And I think maybe just to add, I think philosophically, we aim to build a platform where even there there are tens of millions of customers across Hims & Hers and believe that the suite of categories and specialties we offer today as well as the ones we'll continue to expand into in our categories that affects nearly every household in the country. And so continuing to find leverage in the operational efficiency or automation or throughout the business and give that back to customers is the core philosophy in order to continue to make those price points accessible in a way that you can can truly target that multi tens of millions of customers.

Maria Ripps

Got it.
That's very helpful. And then can you give us a little bit more color on your targeted investments in affiliated pharmacies, you talked about sort of expanding automation capabilities to robotics and software. So any more color sort of on additional capabilities you're able to share? And then are you planning to add sort of more affiliated pharmacy locations at this point? And then lastly, how is this going to how are we going to see this sort of flowing through P&L? Is this largely CapEx or operating expenses?

Oluyemi Okupe

Yes, thanks for the question, Maria on. I think there's a few areas that we would like to invest. And I think that was becoming overwhelmingly clear that the strategy of personalization is fundamentally working. And so there are few areas where we will fundamentally invest on. One is just around the breadth of solutions that we offer across each of our specialties. And so over the course of the next year, we'll invest to make sure that we can continue to expand the number of different conditions and concerns for consumers that we address in the form of more skews as part of that on much of the kind of the first half of this year and into the early half of next year. We'll also expect to just ensure that there's deeper capacity to fundamentally meet meet those needs. That capacity and breadth of solutions will be growth dependent. We don't want to get too far ahead of our skis as we're investing in. And so we'll continue to watch those.
With respect to that, where it will show up, you can expect it to primarily the capital expenditures. And then, you know, starting from like the really the back half of this year to early next year on our facilities run incredibly efficiently today. But with greater scale, we're uniquely positioned to progressively increase the automation in those facilities. And so we expect to start that process in the back half of the year that again, which up in the form of CapEx. But we do expect many of those initiatives to be ROI positive and incrementally drive higher margins that we have the ability to, as Andrew mentioned, that's been mentioned before it was off of a pass through to consumers.

Maria Ripps

Got it.
Thank you so much for the color.

Andrew Dudum

Thank you.

Operator

And your next question comes from Daniel Grosslight with Citi. Please go ahead.

Daniel Grosslight

Hey, guys.
Thanks for taking the question.
I was hoping to get an update on the weight loss program.
I'm really curious on the demographics of the folks that are coming to your platform?
Have they tried L. ones? Are they I'm a little bit wary of trying ZLB ones, and therefore, we'd rather kind of go with you first. And then as we think about GLT ones and potentially bringing those to your platform would be great to get an update on your thinking there and in particular around the compounded GLP-1s and your ability to do that within your facilities. Thanks.

Andrew Dudum

Hey, Dan. Great question. they've been great questions. So I think overwhelmingly, really excited by what we've seen on weight loss. You're talking about over 100 million people suffering. I think the offering we have is accessibly priced affordable safe, and it's put it well on target to hit that [100 million] in 2025 as we said, I think we will continue to expand that portfolio and expect to launch GLP-1 soon as we've talked about in the past.
Regarding compounding, I think probably more to come in the future. Some so probably not too much to share on that today, but it's something we're watching really carefully and wrapping our heads around and the clinical team and the pharmaceutical team and we are solidifying some perspectives on that that we should be able to share shortly.

Daniel Grosslight

Got it.
Thank you.
And Andrew, you mentioned that you have one of your as one of your goals, I'm getting folks on more than one personalized product. I'm going to get maybe some more details on on how many folks right now are on more than one and maybe any kind of qualitative or quantitative benefit you can provide on on those folks, people who have more than one versus just one versus no product?
No, don't personalized products?

Andrew Dudum

Yes, it's a great question. I think more and more we're thinking more about the concept because I think when you think of more than one, it's really this cross-sell right, this e-commerce concept. And I think that as we watch customer behavior and what's becoming clear is personalized versus non personalized is really where we're focusing because in a lot of situations, Personal Lines often means cross category, right? So when you think about our heart health category and our sexual health category, that's a single personalized treatment that is treating both sexual dysfunction as well as cardiovascular disease, right in a simple personalized pill. And so I think as a business, we're not really focused on cross-category conversion as much is personalized human-centric treating an individual holistically. And I think as you start to see some of our categories overlap, for example, on the weight loss category, you had a lot of overlap with mental health and depressive eating on the mental health category. Same thing overlap with obesity. These categories are not not siloed. And so trying to think of a personalized solution that treats all underlying factors of the symptoms or concerns that a patient is having is really the predominant focus. And what we've seen overwhelmingly is if you do that really well, there are multiple reasons that a patient has to continue treatment and some of those reasons might be more cosmetic and some of those reasons might be more clinical and serious. But the combination surely increasing the stickiness and the retention and the reasons people kind of per month remind themselves to pull it out of cabinet or off the shelf and build that out.

Daniel Grosslight

Got it. Thank you.

Andrew Dudum

Thank you.

Operator

Your next question comes from Jack Wallace with Guggenheim Securities. Please go ahead.

Jack Wallace

Thanks for taking my questions and congrats on a great start to the year. You Andrew, just wanted to give you an opportunity to come and thank you for addressing your comments from last week and over the weekend. I just wanted to give you an opportunity to just give us some idea for how the public's response reaction to your comments had any observable impact to the business thinking more specifically around attention or excuse me, attrition and retention, new customer acquisition as well as employee retention, attrition and an inbound residents. Thank you.

Andrew Dudum

Thanks, Jack. Yes, great question. So no material impact that we expect in the business of the guidance that we share today reflects all of the latest thinking. And so we don't expect that to be a big concern at all going forward.

Jack Wallace

Great.
Thank you. And then I just wanted to get a little more color on the the CapEx investments, EME. Should we think of the first quarter's CapEx number being a a fair I'm kind of jumping off point into the second half of the year and appreciate your response to the prior question.
And then second, in terms of the therapeutic categories, sounds like maybe weight loss is getting some additional attention with the expanded capabilities there. But any other category is existing that might be getting some extra attention as well as preparation for new categories? Thank you.

Oluyemi Okupe

Yes, I can start with the first part of the question, maybe I will turn it over to you to answer for the second half. And I think what really what we really see Jack is, as mentioned kind of in the prior question, we'll look to calibrate the capital expenditures relative to the growth that we are seeing. I think historically, if you rewind two years ago, our capital expenditures were fairly minimal in the low $1 million to $2 million range over the course of the next three years, like we do expect as more intensity in the CapEx. We don't expect to return to those levels for the next three years, but it will fluctuate as we start to invest in machinery or expanding capabilities in the facilities. So it's hard to give an exact like quarter to quarter number, but we do expect it to be elevated similar to what we've seen kind of in the latter part of last year or two to last quarter.

Andrew Dudum

And I think a lot of these capabilities are centered around both pharmaceutical complexities. You can imagine form factor variation. We've got a number of form factors on the breadth of specialties and portfolio today, but there's quite a few more that we can be bringing to market. There's complexity in specific ingredient compounding, so there's actually necessary processes for more complex ingredients that are more challenging to put together into these form factors. And then obviously, there are categories that we are excited by that we've talked about in the past and hormonal balanced menopause, testosterone, pain management, insomnia, right? These are categories we've always talked about and believe and believe there's a lot of people struggling and an opportunity to deliver hyper-personalized treatments at very affordable prices. And so a lot of that CapEx investment is not only going toward some of the near-term categories, but building the foundation for for what's going to be necessary a couple of years from now.

Jack Wallace

Great.
Thank you so much.

Andrew Dudum

Thank you.

Operator

Your next question comes from Jonna Kim with TD Cowen. Please go ahead.

Jonna Kim

Thanks for taking my question and just wanted to get a better understanding of sort of what changed in terms of the full year, but full year guidance in the first quarter versus how you got it in the fourth quarter and just curious which areas deliver upside versus your original expectations? And also what changed in terms of your second half expectations?
Any color will be helpful there.
And just another question is, have you seen any a change in consumer behavior by different income cohorts across your categories? Thank you so much.

Oluyemi Okupe

And maybe I can start the first part of the question on the guide, and then you can turn it over to Andrew for a broader clarity around what we're seeing with the consumer.
I think really, John. I think what we did see in the first quarter is just record level of momentum, both in terms of the magnitude of consumers that were coming onto the platform relative to what we were expecting as well as the frequency, which was they're opting for personalized products. As we mentioned, they typically do carry higher, higher retention levels. And so really what's embedded in our guidance is just the strong momentum that we've seen. And we're seeing that across pretty much all of our specialties, given the fact that we've innovated the suite of products, whether it's actual, how dermatology or the new category. We're seeing continued strength across each of our specialties, and we expect to continue to innovate with a very attractive pipeline on each of those specialties. And so really that's what's embedded in the guide is a very strong pipeline of things to come with the strong uptick in consumer acquisition in the first quarter and then just the adoption of personalized products.

Andrew Dudum

And regarding consumer confidence, I think we continue to see strength across the demographics of income levels. I think probably because of a couple of things. And this has happened historically when consumer confidence has dropped and others have struggled in traditional consumer channels and our business has remained resilient. I think you're talking about categories and products that are incredibly emotionally resonant and core to the well-being of the consumer right there, products that when the customer wakes up in the morning, it looks in the mirror are highly impactful to how that debt goes and how they show up in the world. And so I think very, very sticky in that way.
On top of that I think the strategic pricing initiatives from the last year have continued to make those even further affordable, such that we have not seen any types of concerns and consumer strength whatsoever.

Jonna Kim

Got it. Thank you so much.

Operator

Your next question comes from Aaron Kessler with Seaport Global. Please go ahead.

Aaron Kessler

Great.
Thanks, guys.
Congrats on the quarter. A couple of questions. One, maybe just can you update us on the women's kind of performance or the performance in the quarter?
I think you had a pretty strong growth last quarter. And then just on the mental health side, maybe an update there. And our recent survey was showing pretty high rates of depression as particularly among younger adults. Just curious kind of what you're seeing there as well. Thank you.

Andrew Dudum

Thanks, Aaron, and great to have you on the her side of the business, continuing to see it be one of the fastest growing, if not the fastest growing parts of the business. And this is comprised of hers. Dermatology has hair the hers weight loss category as well as the mental health business. And all of those are growing very robustly. And I think really pulling the Company had in a dramatic way. And when we look at some of the penetration rates that the business has in those categories, it's quite small as you're talking one, 2% penetration rates in a very, very massive market. And so we suspect that the brand and the investments in the brand that we've been making in the last year or two are really just starting to unlock the awareness levels necessary to start taking massive share. But we believe strongly that from what we can tell, we've got strong product market fit in those three or four categories. The breadth of portfolio of offerings is expanding very rapidly, many products in the last quarter and many to come in the next couple in a way that gives us constant confidence that that growth rate will be able to be sustained for quite some time.

Aaron Kessler

Great.
Thank you.

Andrew Dudum

Thank you.

Operator

Your next question comes from Glen Santangelo with Jefferies. Please go ahead.

Glen Santangelo

Thanks for taking my question, but he gives us sort of unpack some of the numbers here. Maybe a couple of financial questions. If I could I mean, the subscriber growth of 41% in the quarter was almost equivalent with the sort of the revenue growth uDraw. But when I sort of peel back the layers a little bit. It looks like the monthly sales per average subscriber were flat, but yet your average order value was up 21%, which may be suggests that you're continuing to have success booking multi-month subscriptions. I was wondering if you could just give us a little bit more city and although a little bit more meat on both those two numbers because I think what some of us are trying to assess as well is we get the churn question a lot. And so I'm just trying to make sure I understand how all these are all these metrics ought to play off one another?

Oluyemi Okupe

Yes, sure. And thanks for the question, Glen. I think I think we've said in the past that the primary growth lever that we're focused on as a company is around subscriber growth. And so a lot of the strategic initiatives, whether it's around personalization or some of the pricing elements we've talked historically in the past, those are geared towards both making it attractive to the consumers to come to the platform as well as keeping consumers on the platform for multiple years, if not even decades. And so largely, our performance this quarter was primarily driven off of the subscriber growth. As you mentioned, we expect that to continue to be the case and then with respect to the monthly average revenue per subscriber loss AOV, really our focus is, as you mentioned, and continuing to make sure that the multi-month bundles are attractive and we see continued success there with respect to some of the movement that you see in A. And B, it is driven primarily by that as well as some of the on the product mix, the mix dynamics as well with the way forward momentum on food?

Glen Santangelo

And then just one more quick question on the guidance. If I sort of look at the the adjusted EBITDA margin you put up in 1Q and what you're sort of implying for 2Q, it seems to suggest a reasonable step down in the back half of the year to be consistent with your sort of full year guidance. I was wondering, is that some level of conservatism you're building in or are there some you've talked in this call about some planned investments that may ultimately be made. So I'm just trying to make some sense of of why we should expect the margin in the back half of the year to go down?

Oluyemi Okupe

Yes, I think it's a great question, and I think Q1 was definitely a phenomenal quarter for us, and we are very excited by the remainder of the year to come. But really what we are doing is we're leaving ourselves enough flexibility. As we've mentioned, we do continuously look for ways to pass value back to consumers on whether that's the case of leaning back into marketing as we start to have new new categories come online or start new products come online, we will look to be opportunistic. We have the flexibility to invest there. And then, you know, as we mentioned before, over the course of several quarters, we do run experiments identifying what are the most accretive ways to pass you back to consumers. We're very close to finalizing some of those experiments and excited by those. And so I do want to leave ourselves flexibility in the guy to have the capability to ultimate US.

Glen Santangelo

Okay.
Thank you.

Bill Newby

Your next question comes from Jailendra Singh with Truist Securities. Please go ahead.

Jailendra Singh

Thank you, and thanks for taking my questions and congrats on a strong quarter for a couple of quick clarification questions. On the subscribers using personalized solution. When you had 35%, what was the figure among the new members you added in 1Q in terms of using a personal solution? And second part of the question is like what is your outlook reflecting in terms of this figure by end of the year?

Oluyemi Okupe

Yes.
Maybe I can start with some of the more granular details and then Tom can add it over to Andrew to add some of the products whose questions we didn't explicitly guide to you know, basically a new number specifically, what we do see is that the adoption for new subscribers of personalized products tends to be higher just because I think many of those users for the first time when they come to the platform are identifying the attractiveness of personalized solutions is also what we do see is that in many of the newer categories, the adoption rate is quite strong just because the vast majority of the user base is disproportionately oriented towards towards new users. And so we do expect that number to basically creep up each quarter on alongside it. And we're excited by the potential that, that means for retention in the Internet, not provisioning.

Andrew Dudum

Yes, Jailendra, maybe just I mean, at a high level, I think we expect the vast majority of the business in the coming years to be on being treated with a personalized offering. It's the underlying relationship these customers have with the platform the stickiness, the degree of choice and customization that they're provided, the flexibility tools that they have are just meaningfully more powerful than a traditional generic treatment. So we expect the vast majority of business in the coming years to move towards those types of treatments.

Jailendra Singh

Okay. And then my quick follow-up. Just kind of trying to better understand your comment around pricing adjustments flexibility in '24. Has there been any change in your thought process given what you've learned about the consumer behavior competitive environment so far in the year in terms of getting more or less aggressive at those changes in the year? And what kind of data points will you be watching or focused on, which will drive your decision to make these adjustments?

Oluyemi Okupe

yes, I think we can go a bit into just like what is the philosophical approach behind some of the changes that we make. And so I think that as a management team that as a company, I think we're less focused on what's happening quarter to quarter. As Andrew mentioned, we've seen the consumer remain very resilient just given the types of conditions are oftentimes served in, they tend to be more resilient in nature. And so really, we think around whether it's pricing or other mechanisms that we use tough value back to consumers what will drive the decision to do that will be primarily just around the data that we receive in experiments in identifying which categories which areas and which types of vehicles result in the highest ROI. And so that will be more of the governing factor versus on any given concern or opportunity in a quarter.

Jailendra Singh

Great.
Thanks a lot.

Operator

Your next question comes from Korinne Wolfmeyer with Piper Sandler. Please go ahead.

Korinne Wolfmeyer

Hey, good afternoon, guys. Congrats on the quarter and thanks for the question. To touch on the churn question, kind of in a different way. I mean, I think what were also arguments that hasn't been quantified very clearly of what's changing with retention and churn levels. So I guess is there any way you can give us better color on like how many of your are multi-month subscribers, our ending up doing reorders after their first initial order and how many are falling off and then any other detail you can give us there. Thank you.

Oluyemi Okupe

Yes, I think what I'd point to credit, and it's a great question, I think are too few data points. One is just like the previous guidance we've given around long-term retention levels, north of 85%, I think the whole pull through. And if anything, I think the hope for us would be the fact that drug gets stronger. We did see across Q1 really is just a record level of additions of net new subscribers. And that's a function of the efficiency on acquisition, but also just some of the benefits and longevity as we continue to pass value back to consumers in the form of pricing experiments or other value added ads to consumers. We do expect the retention to improve and improve in the coming quarters, but it's very difficult to give exactly no quantification numbers around that.

Korinne Wolfmeyer

Got it. Thank you really appreciate it. And then on I think you guys kind of hinted towards new product launches. And I think, Andrew, you said potentially GLP. one down and when you laid out the guidance, how much of the improvement in the guidance is coming from new product launches? And is anything getting pulled forward sooner than anticipated? And then any detail you can give us on timing of GLP. ones? And is that a this year thing or maybe an extra thing? Any color there would be great. Thank you.

Andrew Dudum

Yes, on the GLP-1 side definitely in this year. So I would expect them expecting soon as we've talked about them. But regarding the other side and let me give you tackle.

Oluyemi Okupe

Yes, I mean, with respect to the question around the guidance, Karin, I think that really that's less of a function of a specific categorical launch or product launch and release, but it's more of a function of as we expect continued strong demand from consumers that we similar to what we saw in the first quarter. And we do expect a continued uptick in personalized products. We're very excited by the portfolio to come, but has historically with our guidance philosophy, we generally roll forward what we have certainty and visibility into and so reflected in the guide is what we can see based upon today and some of the impacts that we have around products that have already launched or are imminently coming.

Korinne Wolfmeyer

Great.
Thank you.

Operator

Your next question comes from George Hill with Deutsche Bank. Please go ahead.

George Hill

Good afternoon, guys, and thanks for taking the questions. I have a kind of one big picture one and one small picture one enduring yummy. I guess the small picture one is, do you guys have an opinion kind of at what price point GLT. ones inflect for you from a subscription and volume perspective. And I ask that as somebody you know, from the drug supply chain side, we see pretty significant price competition in that space and discounting in that space. So prices are coming down pretty significantly.
And then my back my follow-up question to that is, I mean, to your comments, when you talked about wanting to grow a business that has tens of millions of subscribers, kind of which disease states and product categories do you think are most important for getting to that goal?
Thank you.

Andrew Dudum

Thanks, George. On the GLP-1 side, I'm not sure. We probably have a perspective to share on that at this point. But I agree very interesting question and definitely dynamic for a changing three pretty near near time. So I think we'll be able to share more on that shortly.
Yemi, I'll let the second half.

Oluyemi Okupe

Yes, with respect to the categories, I think, George, I think the benefit of our platform is that it's both comprehensive. And at the same time, we are very focused on five core specialties that we operate in within each of those specialties. There's tens of millions, if not hundreds of millions of subscribers for us to go to go after. And so I think that we are confident in each of the specialties they have the ability as we mentioned in the past, to be at least [$100 million] or more of revenue by next year. Even that said, I think across many of the many of these. We're just scratching the surface through continued innovation on the personalization side as well as continuing to broaden the product suite at different price points. We do feel very confident in our ability to have each of these be multi multibillion-dollar businesses.

George Hill

Okay.
I don't know if there's time for a quick follow-up. I would just call more than GLP ones where brand seems to be very important in that category name brand is very important that category where name-brand is kind of less importantly, your name-brand Hims & Hers is important up in your in your kind of product set. Is that something that you view as kind of different or like something you can conquer? Or I don't know if you can talk about how you would address the marketing aspect of that category and how it's different from what you guys have done historically?

Andrew Dudum

Yes, I think I probably can't give too much there, but I do think that when you're talking about GLP-1 and specific, even to Dan's question earlier around compounded GLP-1, the safety profile and the clinical excellence around those, I think is critical, right and I think there is a wide range of offerings in market with a wide range, probably of clinical best practices. And I think when we bring things to market as we've kind of said in the past, we don't necessarily believe we ever need to or should be the first to market, but we should be the best in market. And I think that's the way we'd approach this category. And this launch of being able to ensure customers that the offering and the products are the highest quality, the highest testing and have a degree of safety and clinical excellence that is really unmatched and they know that.

George Hill

Great. Thank you.

Operator

There are no further questions at this time. This will conclude today's conference call. Thank you.
All for your participation. You may now disconnect.