HIMS — A Shareholder’s Concerns Regarding Medical Efficacy Claims and Long-term Value Creation

What objective, verifiable evidence demonstrates that Hims & Hers' personalised treatments, particularly those guided by MedMatch AI, lead to significantly better health outcomes?

Dear Hims & Hers Management Team,

As a committed long-term shareholder in Hims & Hers Health, I am writing to express my concerns regarding what I perceive to be a significant risk to our company’s future valuation: the absence of independently verifiable evidence supporting claims of superior medical efficacy for our platform and personalised treatments. While I remain enthusiastic about the company’s impressive growth trajectory and innovative approach to healthcare delivery, I believe addressing these concerns is critical for sustainable shareholder value creation.

Investment Thesis and Context

My investment in Hims & Hers is predicated on the compelling vision of democratising access to healthcare through technology, removing stigma from sensitive health conditions, and leveraging data to deliver superior personalised care. The company’s phenomenal subscriber growth — now exceeding 2.4 million with 1.4 million reportedly utilising personalised solutions — validates the market demand for this approach.

However, as the competitive landscape intensifies and regulatory scrutiny increases, I believe our competitive moat and premium valuation must ultimately rest on demonstrable clinical superiority rather than solely on brand recognition, convenience, or marketing excellence. It is through this lens that I share my concerns and recommendations.

Current State of Efficacy Evidence: A Critical Assessment

The cornerstone of Hims & Hers’ differentiation strategy appears to be our personalised healthcare paradigm, with MedMatch AI as its technological foundation. Company communications consistently emphasise that this approach will deliver superior health outcomes. Yet after thorough research, I find a troubling evidentiary gap between this narrative and independently validated clinical results.

Weight Loss Programme Data

The company white paper “Hims & Hers Weight Loss: A Look at Early Customer Experiences and Outcomes” from October 2024 presents encouraging initial results:

Customers using oral medication kits experienced an average weight loss of 7.5 pounds (approximately 3.6% of initial body weight) within the first month

Those using compounded GLP-1s reportedly lost an average of 9.3 pounds (about 4.1% of initial body weight) in the first month

After 12 weeks, 70% of individuals using compounded GLP-1s maintained their subscription and achieved an average weight loss of 14 pounds (representing 7% of initial weight)

While these figures appear promising, several critical limitations warrant consideration:

1. The data lacks comparison against control groups receiving standard care or competing weight loss treatments

2. The results represent relatively short-term outcomes without evidence of sustained weight maintenance

3. The methodology, including subject selection criteria and dropout handling, is not subject to the rigorous peer-review process typical of medical literature

4. The potential for selection bias exists, as those continuing treatment may represent individuals experiencing better-than-average results

MedMatch AI Mental Health Claims

The November 2023 press release introducing MedMatch AI indicated the technology was being “evaluated on independent metrics including remission rates once treatment begins, time to remission, and patient satisfaction.” During the Q3 2023 earnings call, leadership stated that “MedMatch improved remission rates, time to remission and customer satisfaction” in its psychiatric beta.

These claims raise several concerns:

1. No specific quantitative data has been provided on the magnitude of these improvements (e.g., percentage increase in remission rates or reduction in time to remission)

2. The comparison benchmark against which these “improvements” were measured remains unspecified

3. No independent validation of these findings has been published in peer-reviewed medical literature

4. The assessment methodology, including how remission was defined and measured, has not been transparently disclosed

5. It is particularly concerning that for a technology positioned as transformative for clinical decision-making, the publicly available evidence remains primarily qualitative and company-generated rather than independently verified through rigorous clinical evaluation.

Patient Satisfaction vs. Clinical Outcomes: A Critical Distinction

Hims & Hers frequently cites high retention rates and satisfaction scores as evidence of platform value:

82% of customers remain subscribed for longer than three months

85% of users maintain subscriptions for at least two years

Only 13% of customers using compounded GLP-1s cancelled subscriptions in the first month (compared to an estimated 30% industry dropout rate)

79% of compounded GLP-1 customers reported that treatment experiences met or exceeded expectations

90% expressed satisfaction with personalised dosing plans

These metrics are undoubtedly impressive, particularly in an industry with low switching costs. However, I would respectfully suggest that patient satisfaction, while valuable, is an imperfect proxy for clinical efficacy. Consumers may be satisfied with a healthcare experience for reasons unrelated to medical outcomes — convenience, cost, perceived attention, or even placebo effects.

The October 2024 survey of weight loss customers revealed that 78% reported feeling healthier overall, 52% noted improved confidence, and 67% reported lower anxiety levels. These quality-of-life improvements are significant but may reflect psychological benefits of any weight loss intervention rather than unique advantages of our personalised approach.

As healthcare becomes increasingly consumer-centric, satisfaction metrics certainly matter. Nevertheless, for a company positioned as revolutionising healthcare through superior personalisation, independently verified clinical outcomes must ultimately substantiate this value proposition.

Regulatory Vulnerabilities: A Growing Concern

The company’s reliance on compounded medications creates significant regulatory exposure that appears insufficiently acknowledged in investor communications. While compounded medications serve an important role in healthcare-providing tailored formulations when commercially available options are unsuitable, their regulatory status differs fundamentally from FDA-approved drugs.

Compounded Medication Regulatory Framework

Compounded drugs, while containing FDA-approved active ingredients, are not themselves FDA-approved for safety, efficacy, manufacturing quality, or appropriate labelling. The FDA has issued multiple warnings regarding potential risks associated with compounded medications that have not undergone the agency’s comprehensive review process.

Our Super Bowl advertisement for compounded semaglutide drew criticism from organisations like the Partnership for Safe Medicines, which alleged insufficient disclosure that the promoted treatment was compounded rather than FDA-approved. The distinction reportedly appeared in small white font on a grey background, raising questions about transparency with consumers.

Changing Regulatory Landscape

The FDA’s recent announcement that semaglutide is no longer in shortage creates particular vulnerability. Compounded versions are generally permitted only during shortages of the FDA-approved medication. If regulatory bodies enforce this limitation more stringently, a significant portion of our weight loss programme could face disruption.

This regulatory uncertainty extends beyond GLP-1s to our broader personalisation strategy. As we expand our portfolio of compounded formulations, each represents potential regulatory exposure if marketing claims exceed clinical evidence or if compounding practices face increased scrutiny.

Competitive Differentiation Challenges: An Intensifying Battlefield

The direct-to-consumer telehealth market increasingly resembles a Red Ocean, with multiple well-funded competitors pursuing similar personalisation strategies. Without substantiated evidence of superior clinical outcomes, our differentiation risks becoming primarily cosmetic rather than substantive.

Direct Competitors: Sophisticated Alternatives

Ro (Roman/Rory): This significant direct competitor offers telemedicine services across comparable health categories, also emphasising patient experience and convenience. Like Hims & Hers, Ro utilises dynamic online questionnaires and has pursued vertical integration through its pharmacy network. They similarly provide access to compounded medications and alternative formulations. Some comparisons suggest Ro offers more transparent pricing structures, though potentially at slightly higher price points. Importantly, Ro has also secured partnership with Novo Nordisk for branded Wegovy access.

Teladoc Health: While historically focused more on employer and health plan markets, Teladoc has been expanding its direct-to-consumer offerings. Its Primary360 platform incorporates data-driven personalisation, and the company continues innovating in chronic and behavioural health solutions. Their established relationships with healthcare insurers and employers could provide advantages as virtual care becomes increasingly integrated with traditional healthcare systems.

The Amazon Threat: A Formidable New Entrant

Amazon’s healthcare ambitions represent perhaps the most significant competitive threat. Through its acquisition of One Medical and launch of Amazon Clinic, the company is expanding into telehealth and pharmacy services that directly overlap with our core offerings, including treatments for erectile dysfunction, hair loss, and skin care.

Amazon’s unparalleled operational scale, logistics expertise, and customer base of over 200 million Prime members globally create formidable advantages. Reports suggest they may offer these services at highly competitive, potentially lower price points. The strategic hiring of Nader Kabbani, former head of Amazon Pharmacy, as our Chief Operating Officer suggests management recognises this threat.

Without clearly demonstrable clinical advantages, competing against Amazon’s scale economies and customer reach could prove increasingly challenging. Their capacity to integrate healthcare offerings with their broader ecosystem (Prime, Alexa, etc.) creates unique engagement opportunities that may be difficult to counter through marketing alone.

MedMatch AI: Promise vs. Evidence

At the heart of our personalisation strategy lies MedMatch AI, described as a system deploying artificial intelligence and machine learning algorithms trained on “millions of anonymised data points from millions of customers.” This technology is positioned as transformative for clinical decision-making, enabling real-time identification of optimal treatment regimens for individual patients.

The Promise of Data-Driven Medicine

The theoretical promise of such technology is compelling. By leveraging collective clinical experience and outcomes data, MedMatch could potentially identify patterns and treatment responses that might elude individual clinicians. This could indeed lead to more precise treatment selection, dosing optimisation, and improved outcomes.

The recent acquisition of Trybe Labs for at-home testing capabilities could further enhance this value proposition by incorporating objective biological data into the AI’s recommendation algorithms.

The Evidentiary Gap

Despite this promising vision, several concerns persist regarding the current state of evidence:

1. Limited Transparency: The methodological details of MedMatch’s development, validation, and performance benchmarks remain largely opaque. How were the algorithms developed and validated? What specific performance metrics demonstrate superiority over standard clinical decision-making?

2. Absence of Peer Review: To my knowledge, no peer-reviewed publications have validated MedMatch’s clinical impact or methodological soundness. This contrasts with other healthcare AI systems that have undergone rigorous external validation.

3. Data Quality Considerations: While the quantity of data (“millions of data points”) is frequently emphasised, the quality, representativeness, and potential biases within this dataset remain unaddressed. Has the training data been evaluated for demographic representation, potential selection biases, or confounding variables?

4. Clinical Integration Uncertainty: The practical integration of MedMatch recommendations into clinical workflows and the degree to which healthcare providers actually incorporate these suggestions remains unclear. Do providers consistently follow MedMatch recommendations, or do they frequently override them?

Without addressing these fundamental questions through transparent, independent evaluation, MedMatch risks being perceived as marketing rhetoric rather than a genuinely transformative clinical tool.

Economic Sustainability of the Personalisation Model

The decrease in gross margin from 82% to 73% year-over-year during a period of significant revenue growth raises important questions about the economic sustainability of our deep personalisation strategy. While multiple factors may influence gross margins, this decrease alongside increased investment in personalisation infrastructure suggests potentially higher operational costs for delivering highly tailored care.

As the company continues investing in vertical integration through acquisitions like Trybe Labs and peptide manufacturing facilities, the capital intensity of the business increases. These investments may ultimately prove value-accretive if they enable genuinely superior clinical outcomes that command premium pricing and drive retention. However, without clear evidence of such superiority, they may simply increase operational complexity without commensurate returns.

The economics of AI-driven personalisation at scale remain unproven in healthcare. While the vision of a positive “flywheel effect”-where increased user engagement and data accumulation lead to smarter AI that attracts more users-is compelling in theory, demonstrating this effect through measurable improvements in clinical outcomes and operational efficiency is essential for long-term economic sustainability.

Recommendations for Management

As a shareholder deeply invested in the long-term success of Hims & Hers, I would strongly encourage the following actions:

1. Invest in Independent Clinical Research

   1. Partner with academic medical institutions to conduct rigorous, comparative studies of our personalised treatment approaches versus standard care and competitor offerings

   2. Publish results in peer-reviewed medical journals regardless of outcome, demonstrating scientific integrity

   3. Consider pragmatic clinical trials that assess outcomes in real-world settings while maintaining methodological rigour

   4. Establish a scientific advisory board comprising respected clinical researchers to guide research strategy and ensure credibility

2. Enhance Transparency Around MedMatch AI

   1. Publish a comprehensive white paper detailing MedMatch’s methodology, training data characteristics, validation process, and performance metrics

   2. Commission independent audit of the algorithm by respected AI ethics and healthcare quality organisations

   3. Disclose the specific magnitude of clinical improvements attributed to MedMatch with appropriate statistical context

   4. Establish clear governance processes for algorithm updates, validation requirements, and clinician feedback integration

3. Diversify Beyond Compounded Medications

   1. Accelerate efforts to secure access to FDA-approved branded medications where possible

   2. Develop clear contingency plans for potential regulatory changes affecting compounded medication availability

   3. Invest in developing novel digital therapeutic approaches that complement pharmacological treatments

   4. Consider pursuing FDA approval for proprietary formulations of high-volume personalised treatments

4. Strengthen Regulatory Compliance and Transparency

   1. Implement more prominent, clear disclosures regarding the regulatory status of compounded medications in all consumer communications

   2. Engage proactively with regulatory bodies to ensure marketing claims align with available evidence

   3. Consider commissioning independent review of marketing materials by healthcare regulatory experts

   4. Establish transparent quality control metrics for compounded medications and regularly publish safety monitoring data

5. Refine Investor Communications

   1. Clearly distinguish between internal data and independently verified evidence when discussing clinical outcomes

   2. Provide more granular metrics on MedMatch adoption, utilisation, and impact on clinical decision-making

   3. Transparently discuss regulatory risks and mitigation strategies rather than emphasising only growth opportunities

   4. Articulate a clearer pathway to demonstrating clinically meaningful differentiation through personalisation

Conclusion: Building Sustainable Competitive Advantage

I remain optimistic about the company’s vision to transform healthcare delivery through personalisation and technology. The impressive subscriber growth, high satisfaction scores, and continued innovation demonstrate the team’s execution capabilities and the market’s receptiveness to our approach.

However, as the competitive landscape intensifies and regulatory scrutiny increases, I believe addressing these evidence gaps is essential for sustainable differentiation, defending our premium valuation, and creating lasting shareholder value. Convenience, branding, and user experience may drive initial adoption, but demonstrated clinical superiority will ultimately determine whether Hims & Hers can maintain its premium positioning in an increasingly crowded market.

By investing in rigorous, independent validation of our personalisation advantages, we can transform promising anecdotes into compelling evidence. This would not only strengthen our regulatory position but also create a genuine competitive moat that even resource-rich entrants like Amazon would struggle to overcome.

I would welcome the opportunity to discuss these concerns further and hear management’s perspective on these critical issues. My intention in raising these points is not to criticise but to contribute constructively to our collective goal of building a healthcare company that delivers exceptional value to both patients and shareholders.

Yours sincerely,

A Committed Shareholder