Business Models and Unit Economics

Hims launched in November 2017 from Atomic, the San Francisco venture studio, with a chief executive, Andrew Dudum, who had never worked in healthcare. Its first products were generic drugs for hair loss and erectile dysfunction, conditions men were embarrassed to raise with a doctor. A customer answered an online questionnaire, a physician licensed in the customer's state reviewed it, usually without a video visit where state law allowed, and a pharmacy shipped the pills monthly in discreet packaging. The drugs cost pennies to a few dollars a month to make, so gross margins were about 80%. The brand did the rest: pastel packaging, subway posters and a lower-case logo. Hers, for women, followed in 2018, and the company added dermatology and mental health.

Hims & Hers listed through a merger with Oaktree Acquisition Corp. in January 2021 at about $1.6 billion of enterprise value. Its shares fell to about $3–4 in 2022 with the rest of digital health, then rose more than tenfold in 2024–25 (reported) after it began selling compounded semaglutide in May 2024 at about $199 a month, during an FDA-declared shortage of the branded drug. Revenue rose from about $149 million in 2020 to $1.48 billion in 2024 and about $2.35 billion in 2025, with 2.51 million subscribers, and the company earned its first full year of GAAP profit, about $126 million, in 2024. Then the shortage ended on 21 February 2025, Novo Nordisk partnered with Hims in April and ended the partnership in June, sued it in February 2026 and dropped the suit on 9 March 2026 in a settlement under which Hims now sells branded Wegovy and Ozempic. Hims is the most successful survivor of the 2021 listing class and a lesson in what a cash-pay model can and cannot control. This chapter sets out the units in which healthcare companies earn money and the arithmetic that decides whether they keep any.