Hims & Hers Health, Inc.

Q4 2021 Earnings Conference Call

2/22/2022

spk01: Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Him and Hers Health Fourth Quarter 2021 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Jay Spitzer, Senior Vice President, Investor Relations. You may begin your conference.
spk10: Good afternoon, ladies and gentlemen. Welcome to the Hims and Hers Health fourth quarter and fiscal year 2021 earnings call. On the call with me today is Andrew Dudum, co-founder and our chief executive officer, as well as Demi Okupe, our chief financial officer. Before I hand you over to Andrew, I will, as usual, take you through the legal and safe harbor and cautionary declarations. Certain statements and projections of future results made in this presentation constitute as forward-looking statements that are based on our current market competitive and regulatory expectations and are subject to risks and certainties that could cause actual results to vary materially. We undertake 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 or discussions of risk factors as we relate to forward-looking statements. In today's presentation, we use certain non-GAAP financial measures. We refer you to the reconciliation table contained in today's press release available on our Investor Relations website for reconciliations to the most directly comparable GAAP financial measures and related information. You'll find a link to the webcast on our Investor Relations website at investors.forhims.com. After the call, this webcast, we archived on the website for 12 months. And with that, I'll now turn the call over to Andrew.
spk11: Thank you, Jay. Hims and Hers achieved so many milestones in 2021, for which I'm proud. By year end, we had over 600,000 subscriptions. We grew revenue 83%. We extended our market leadership, invested in building out our management teams, and grew our omnichannel presence to over 20,000 retail locations. This past quarter was no different, with accelerations and strong execution across our core and emerging categories. Revenue accelerated to $84.7 million in the fourth quarter, a 104% increase year over year. Subscriptions grew from 312,000 to 609,000. a 95% increase from year end 2020. As a result of healthier retention, new customer cohorts acquired since 2020 now reach a cumulative gross profit in excess of their paid marketing expense within just two quarters. In terms of brand awareness and traffic, our digital properties grew to over 11 million visits in the fourth quarter, a 90% increase year over year. while decreasing customer acquisition costs per new sub 13% over the same time period. We meaningfully expanded our omnipresent strategy through existing and new long-term partnerships with some of the largest retailers in the United States, including Target, Walgreens, CVS, Bed Bath & Beyond, Vitamin Shop, and more. And in combination, our core and emerging categories are contributing to an acceleration in revenue diversification, giving us confidence in our ability to deliver robust growth for many years to come. We invested heavily in strategic infrastructure this year. This infrastructure both supports the accelerated growth in our core categories, but also lays the foundation for improved customer experiences in our emerging businesses. Improved customer experience is key to our company's ongoing success. and creating a loyal customer base. For that reason, we continue to invest in infrastructure verticalization across every aspect of our business. Whether the ultimate benefit be speed, price, quality, or selection, we believe these strategic investments will ultimately accelerate our ability to delight customers, drive increased profits, and ultimately stronger returns on invested capital. Our distribution and pharmacy fulfillment centers expanded significantly with our compounding pharmacies in Arizona expanding from 1,700 square feet to nearly 25,000 square feet. In addition, our Ohio pharmacy facility now is fully utilizing over 300,000 square feet. Clinical capabilities expanded dramatically with expansion of our EMR's breadth of services to include broadened specialties in dermatology, psychiatry, therapy, and general medicine, powering over 2.4 million visits versus 1.6 million the previous year, and with nearly 25,000 clinical quality reviews compared to 12,000 in 2020. Our iOS mobile platform was launched successfully nationwide. Our initial tests see 60% of new members downloading the app in their first week of beginning a treatment on our platform. unlocking a whole new level of patient engagement. And lastly, our dedicated team grew to nearly 400 full-time employees versus 181 at the end of last year, strengthened by our expanded management team, including our new CFO and Chief Growth Officer. While so much has happened this past year, the reality is that we are in the earliest chapters of our company's life. Today, a small fraction of healthcare is delivered online. But what was true for e-commerce in the 90s is true today for digital health. The wave is just beginning and only growing. Platforms like hims and hers are at the forefront of making people's lives easier, giving them access to treatment and services, doctors and specialists that many people are not otherwise able to obtain at transparent prices and at a level of care and respect often not found in the traditional health system. We believe HIMSS and HERS has the potential to be synonymous with this next generation of healthcare. We are accelerating the discovery and personalization of treatment options and ultimately empowering people with choice, information, and better outcomes. Consumers are eager to interact with healthcare in these new ways, but want to do so with brands that they recognize and trust. The world is changing and our market is moving fast. We are near the front of this race and well positioned, but recognize we're in the early laps. We believe our ability to resonate with young customers, establish relationships with many of the nation's top retailers, build trust and brand loyalty, and drive selection and breadth of services will allow us to solidify and extend this leadership position. Given the scale of this opportunity, we are rigorously focused on creating shareholder value over the long term. At the core of this strategy is an internal focus on our simple yet powerful flywheel. This equation is our North Star. We believe in the power of its compounding benefits and are rigorous in our daily tracking of metrics and analytics, such as engagement, thickiness, acquisition costs, and retention, to ensure we are innovating towards improvements. Here are the basic elements. To begin, we generate brand awareness and trust through authentic marketing and omni-channel distribution. We accomplished a lot on this front through our ability to scale new campaigns with paid marketing dollars of 39% from the first quarter to the fourth quarter, while maintaining relatively flat customer acquisition costs per new sub throughout the year. Tied to this was our ability to scale through our retail partnerships to reach over 20,000 total physical locations, unlocking deeper trust, awareness, and ultimately customers. This increased demand then unlocks our second core element of the flywheel, our ability to broaden access to high-quality medical providers and treat more conditions on our platform. This was a big one for us in 2021. with the launch of new and innovative treatments and services in dermatology, sexual health, mental health, wellness, and primary care. This expansion of medical expertise and broadened treatment selection leads to better engagement, better experiences, and more trust. Ultimately, in turn, restarting the flywheel and bringing in more customers once again. I woke up on New Year's Day and told my wife I'd never been more excited to start a new year. Our business is stronger than it has ever been, our team more committed than ever before, our brand more well-known, our products lining more shelves, our selection and innovation and treatments more diverse, and our ambitions bigger. And most importantly, our customers are happier and healthier. I'm proud of the results we share with you today and of our team's dedication to our mission. Before handing it off, I'd love to take a quick moment to introduce you to one of our newest leaders and Chief Financial Officer Yemi Okupe. Yemi brings to the HIMSS and HERS leadership team a wealth of experience successfully scaling some of the most disruptive technology companies of the last two decades. Uber, Braintree, Google, eBay and PayPal. Yemi's superpowers have already begun to accelerate the pace of innovation, growth and efficiency within our business. I'm honored to welcome him and energized by his early contributions. At this point, I'll now turn the call over to Yemi for a more detailed review of our results.
spk12: Thank you, Andrew. Hi, everyone. Thank you for your time today. I look forward to engaging with you further in the near future. I am elated to join him and hers at such an exciting moment in the company's lifecycle. Over the course of the last decade, technology has disrupted the way that consumers engage with companies across numerous industries, whether that be how they move around in the world, accept and remit payments, acquire goods, or consume media content. Healthcare is an industry that is in the early innings of similar disruption. I firmly believe that we have the components necessary to be at the forefront of this disruption. This includes a strong brand that consumers recognize and increasingly trust, as well as an outstanding team that has the ability to execute against our mission of providing greater access to high-quality, convenient, and affordable healthcare. I'll now take you through our fourth quarter and 2021 results. Following that, we will provide guidance and insight into our underlying assumptions for the first quarter of 2022 and the full year. We are delighted by last year's performance with surpassed expectations outlined in our previous guidance. Fourth quarter revenue was $84.7 million, up 104% year over year. Revenue for 2021 was $271.9 million, up 83% compared to 2020. When excluding the impact of M&A transactions, fourth quarter revenue grew 89% year over year to $78.5 million. Full year 2021 revenue grew 75% year-over-year to $259.7 million when excluding the impact of M&A transactions. Several factors contributed to our success in 2021. Online revenue growth continued to remain robust in 2021, increasing 84% year-over-year to $259 million. Growth came primarily from subscriptions, which increased 95% year-over-year to $609,000. Subscriptions on our platform enable us to surpass 1 million net orders in a quarter for the first time in our company's history. Strong execution and increased awareness of our brand provided us with the opportunity to increase our paid marketing investment through the year while holding CAC per new subscriber roughly flat throughout 2021. This is notable as it points to our ability to increase customer acquisition velocity without materially compromising our principles around disciplined investment. 97% of online revenue comes from subscriptions, which is a core source of recurring revenue. In the fourth quarter, we continued to successfully expand our omnichannel presence via partnerships with leading retailers across the country. Wholesale revenue grew $12.7 million in 2021, with $6.4 million of that revenue coming in the fourth quarter. This represents an increase of 58% and 365% for 2021 and the fourth quarter, respectively. Wholesale growth was driven by continued success with current partners such as Target, as well as the onboarding of new partners such as CVS and Walgreens. Gross profit margin was 75% for 2021, which represents an increase of about 160 basis points year over year. Gross profit margin declined 70 basis points from the third quarter to 73% in the fourth quarter as we anticipated. The sequential quarterly decline was primarily driven by a shift in mix or more wholesale revenue, which carries lower margins than our online business. Retail partnerships deliver value in ways that extend beyond the financial benefit. We feel that partnerships with the country's top retailers drive higher brand awareness and further establish trust with consumers. As our products drive value for our current retail partners, demand is sparked for new partnerships, which helps once again further generate additional brand awareness and trust with consumers. This is one element of our strategy that we believe has contributed to our ability to maintain CAC per new subscriber in a year where there has been increased cost pressure across several marketing channels. Pivoting to our operating expenses, general and administrative expenses increased from 44% of revenue in 2020 to 67% of revenue in 2021. This is largely the result of an increase in stock-based compensation related to the earn-out consideration and other one-time costs that stem from our initial public offering. Excluding stock-based compensation, G&A as a percentage of revenue was 46% in 2021 and 41% in 2020. This increase was related to additional costs that came as a result of our transition to a public company. We anticipate that we will gain leverage on G&A expenses going forward. Marketing as a percentage of revenue increased 10 points year-over-year to 50% in 2021. This was primarily the result of a proactive decision to increase investment in marketing. This decision was made to opportunistically take advantage of our ability to bring more subscriptions onto the platform at similar levels of spend efficiency throughout 2021. The difference in cap per new subscriber between the most and least expensive quarter in 2021 was less than 5%. A diversified set of acquisition channels combined with the continued scaling of our brand were the primary drivers behind our success on this front. Quarterly new customer cohorts now typically deliver cumulative gross profit in excess of paid marketing costs in less than two quarters. This gives us confidence that the incremental customers acquired in the second half of 2021 will drive incremental value for years to come. Adjusted EBITDA loss was $7.1 million in the fourth quarter and $30.1 million across all of 2021. We continue to receive benefits from previously launched products such as multi-month ordering and saw gains in operational efficiency. These factors have meaningfully improved the unit economics in newer cohorts. The 12-month cumulative gross profit from subscribers acquired in 2020 was nearly four times that of the 2019 cohort. The 2021 cohort of subscribers is following a similar trajectory as the 2020 cohort. Through 2021, we made a deliberate decision to reinvest a portion of efficiency gains into the acquisition of additional customers. Increasing retention rates and the recurring nature of the majority of our revenue, combined with faster payback periods, provides us with the conviction that the investment in our platform is a sound decision. For context, in 2021, we retained close to 80% of 2020 online revenue from cohorts acquired prior to 2020. 2021 was an exemplary year for HEMS and HRS. We continued to grow our customer base and revenue footprint across our core online categories, made meaningful progress in the development of emerging categories, further extended the footprint of our strategic wholesale channel, and welcomed two new teams, Apostrophe and Honest Health, into the portfolio. We entered 2022 with a robust balance sheet that has $247 million of unrestricted cash and short-term investments and zero debt. Additionally, the lifetime value of newly acquired subscribers is the highest it has been, which will allow us to progressively improve our adjusted EBITDA margins and continue to invest in the expansion of our platform in a prudent manner. I would now like to take the time to provide additional color on our outlook for 2022. Starting with the first quarter, We are anticipating revenue to be between $90 to $93 million, representing a year-over-year increase of between 72% to 78%. A few factors are powering our growth, which include the continued revenue benefit from customers acquired as a result of the marketing investments made in the second half of 2021, incremental revenue from the honest health and apostrophe transactions that were not completed until June and July of 2021, respectively, and continued momentum from wholesale partnerships, most notably the recently announced partnership with Walmart. Adjusted EBITDA losses are expected to be between negative $12 million to negative $10 million in the first quarter. In the early weeks of 2022, we have continued to see attractive investment opportunities that we are confident will pay off for future quarters. Looking to the full year, we are anticipating full year 2022 revenue to be between $365 to $380 million, which represents a year-over-year increase of 34% to 40%. This range is above our previously stated target of 30% year-over-year growth, reflecting confidence in our ability to roll forward 2021 dynamics that resulted in healthy growth. We expect M&A transactions closed in the second half of 2021 to contribute between 10 to 15 points of year-over-year growth in the first half of 2022. That effect will dissipate in the second half of the year as we start to lap the completion of these transactions. We are confident that both apostrophe and honest health will be significant contributors in delivery of both our strategic and financial objectives. Early signs of success from our new categories, higher retention rates of new cohorts, and new learnings from marketing experiments give us strong conviction in our ability to maintain a growth rate of at least 30% for the foreseeable future. Quarter-to-quarter volatility may exist given how quickly our business is evolving, combined with the challenges of estimating the exact timing for when a specific catalyst will accelerate. Anticipated impact from IOS changes has been factored into our guidance based on learnings from 2021. We look forward to updating you with developments during our quarterly earnings calls. With the launch of Walmart and higher sales velocity among top retailers, we are anticipating substantial wholesale revenue growth in 2022. Online gross profit margins are expected to remain relatively stable. However, wholesale growth carries lower margins than our online business. As a result, we are expecting gross profit margin degradation at a portfolio level similar to what we saw in the fourth quarter of 2021. As previously mentioned, our wholesale partnerships drive greater consumer awareness of our brand, which we feel benefits our acquisition efforts in other channels. Looking toward the bottom line, our expectation is that 2022 adjusted EBITDA losses will be between negative $30 million to negative $20 million. The midpoint of the adjusted EBITDA and revenue range results in an adjusted EBITDA margin of 6.7%, which represents a more than 4 percentage point year-over-year improvement from 2021. Our belief is that establishing a leadership position across multiple categories will allow us to provide consumers a broad selection of quality healthcare offerings, which can be a significant point of differentiation. We expect to continue to invest in the development of new categories, as well as in solidifying our position in our current core categories. Continued leverage from our omnichannel strategy, healthy customer retention patterns, and continued refinement of our capital allocation framework provide us confidence in our ability to make these investments in a way that does not compromise the high standards set forth in our historical allocation of capital. 2021 was an incredible year, and we remain more optimistic than ever in the future outlook of the business in 2022 and beyond. I will now turn it back to the operator to start the Q&A portion of the call.
spk01: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question today comes from the line of Michael Cherney with Bank of America. Your line is now open.
spk05: Good afternoon. Thanks so much for the color, and Yemi and Jay, welcome, obviously, to the first call today. I want to... Talk a little bit about, Yemi, you made a comment regarding marketing spend, some of the targeted marketing that you put in place and how it's already paying its dividends in terms of new customer growth. As you think about some of the category expansion you've had, thinking about some of these marketing partnerships and the wholesale revenue, how does the next couple of years of targeted marketing spend and potentially incremental campaigns dovetail against an eventual pathway towards building to EBITDA break-even?
spk04: Yeah, sure. I can take this one. This is Yemi.
spk12: I think what we would say is we will, given our balance sheet, we will continue to lean into marketing investment while the opportunities remain attractive. What we would point to is the fact that we are able to break even on newer cohorts within two quarters. While there are attractive investment opportunities, we will continue to invest in those. But what we are already seeing is the fact that the velocity which different cohorts are returning value is accelerating. As a result of that, what we did see in Q4 is cash flow from operations was down to roughly negative 3.1 million. And so we do have the flexibility to continue to decide when to make these investments, again, given the balance sheet and the already strong performance that these cohorts are returning.
spk05: Got it. And then just in terms of thinking about 22 guidance, clearly the net order growth has been remarkably strong. AOV has kind of trended in a fairly similar trajectory over the course of 21. How should we think about that metric for 22? What are the puts and takes that you would expect, especially as the subscription growth continues to build?
spk04: Yeah, I would say we expect AOV to be flat to slightly up through the course of 2022. Okay, that does it for me for now. Thank you so much.
spk01: Your next question comes from the line of Matthew Shay with Piper Sandler. Your line is now open.
spk09: Hey guys, thanks for the question and congrats on another strong quarter. I appreciate the commentary that the iOS changes are incorporated into guidance, but curious if you can provide any colors on some of the new channel marketing channels you've invested in beyond the retail partnerships, any kind of, you know, relative efficiency gains you have within those and plans to continue investing. and any of those channels you're able to provide more color around. Thanks, Matt.
spk11: I can answer a little bit on the front end. We don't really disclose breakdowns of channels, but as we've talked about in the past, really marketing dollars don't go to any one channel more than, let's say, 20%. And so there's really powerful diversification taking place within the business on where we're deploying capital. and then also increased diversification when it comes to the categories for which we're deploying capital. So you can think of, even in simple terms, seeing advertisements of Jennifer Lopez for postmenopausal hair loss, as well as advertisements with Miley Cyrus for early 20s female dermatology, and then Rob Gronkowski for, let's say, men in their 30s suffering from anxiety and depression. So there's this diversification taking place on a channel and category category level that I think, to Yemi's point, has allowed us to continue to scale marketing investments while maintaining that customer acquisition cost efficiency. So if you look over the last year, you know, we've increased marketing spend from Q1 to Q4 by close to 40%. But the actual variance in the acquisition cost per subscriber went up or down no more than just a couple of points. And so there's a ton of innovation and a ton of experimentation taking place at the channel level, at the category level to continue to deliver these results. But it's probably the accumulation of a tremendous effort and a large team effort within the company making it possible.
spk04: Got it. That's super helpful.
spk09: And then. My understanding is the Target exclusivity kind of expiring is what's opened up the ability to have these relationships with all these other retailers. So curious where that Target relationship stands today, whether there's any channel conflict with you working with Target and Walmart, and whether it's fair to expect more retail partnerships going forward.
spk11: Yeah, you know, the relationship with Target is exceptionally strong. You know, they're contributing a large part of that growth in the retail channel that we mentioned year over year. But we've been able to branch out, and the demand, I think, on the retail side has really been energizing for all of us, whether it be CVS or Walgreens or Walmart or GMT, Bed Bath & Beyond, Vitamin Shop. I mean, there's just an incredible demand for the products, and those retailers are coming to us with an energy of, that I think is very rare. So I think to our earlier statements, we believe in those retail channels as brand building, as trust building, and as ultimately kind of the first leg of our flywheel that helps accelerate customers to the online platform. And so we'll continue to be investing in those channels for that strategic reason. The dollars that come in the door from them are obviously gravy on top that we enjoyed, but I think the strategic benefit from an efficient marketing holistic strategy And the omnipresent trust that comes with those relationships with customers is really what we prioritize more than anything.
spk04: Got it. Thank you. Congrats again, guys. Yeah, thank you.
spk01: Your next question comes from the line of Jalindra Singh with Credit Suisse. Your line is now open.
spk08: Hi, this is Adam for Jalindra today. Thanks for taking the question. Congrats on the results. Just wanted to go back and look at the guidance for 2022 for a bit and, you know, just comparing the 34% to 40% revenue growth versus the thoughts around the pre-Q call of the 30% growth. Just curious, you know, if you could elaborate a little bit on what to attribute that raise to and just maybe more of a high-level question in terms of the, like, the level of conservatism around the guidance for 2022. Has that changed at all as we think back as as when you guys put guidance forth last year for 2021.
spk03: Sure. Hi, Adam.
spk04: This is Yemi. I'll go ahead and take that one.
spk12: I think that there's a few factors going on. So one is the, as we mentioned, the investment and the flywheel that we made in the second half of 2021. We are seeing some of those dividends start to pay off in 2022. And so given the fact that we have a larger base that we actually did 2021 with, that does give us the conviction to increase and elevate the range. What I would say is that we are focused on sustained and repeated growth, not just for one year, but for multiple years. And so, given many of the dynamics that we've seen that Andrew mentioned previously, we do have firm conviction in our ability to maintain the long-term growth rate north of 30%. Again, just given the large time that we have on some of our historical categories, as well as some of the early signal that we're getting in emerging categories, gives us that conviction.
spk03: Got it.
spk08: And then just a question on the 1Q19, 1Q21 cohort comparison in the presentation. Should we think about the 1Q21 cohort as kind of the new normal for the business moving forward? And how much of a benefit did the multi-month purchases, I guess, contribute to the 1Q21 cohort performance compared to the 1Q19?
spk03: Thanks. Sure.
spk12: There are several factors in the overall improvement. Some of it, as you mentioned, is the multi-month ordering. We also did see operational efficiencies as well as higher retention rates that did result in improving in economics across the cohorts. Given the fact that we've seen this not just occur with just the Q1 21 cohort, but several repeated cohorts since then, We do have the conviction that this is a sustainable trend on a go-forward basis.
spk04: Got it. Thanks a lot. Congrats again. Thank you.
spk01: Your next question comes from the line of Daniel Grosslitt with Citi. Your line is now open.
spk07: Hi, guys. Thanks for taking the question. Some of your competitors have branched out into diagnostic testing and the treatment of higher acuity conditions. You noted that product expansion will be a driver of growth, but perhaps more of a medium-term driver. Can you provide more details around which additional conditions you're looking to expand into first and then the timeline for that expansion?
spk11: Yeah, I can take that. Thanks, Daniel. You know, I think as we shared the combination of the core categories and the emerging categories is really what's helping us accelerate that revenue diversification and unlock that 30% confidence on a long-term basis. And so I think what you can expect from us in the future is similar to what you've seen from us in the past, which is, you know, one to two major category expansions every couple of quarters. You know, this is what we've done essentially since we launched the company, you know, four plus years ago. And I think this is the strategy on a go-forward basis. You know, we're not a team that is going to be doing dozens of expansions and dozens of new categories every quarter. I think we'd like to focus on one or two and do them really right every few months. And so I think that's kind of a timing dynamic. What you can expect from actual categories, you know, there's a lot that the team is always looking at. One that we believe are very well suited for the platform that we spend time investing in and researching are categories such as insomnia, pain management, weight management, fertility, hypertension, hyperlipidemia. Those are categories that we believe are very well suited on the platform, and the platform is today really well equipped to tackle. And there are also categories, frankly, that affect tens and tens of millions of people in the country, and so we know that they are high impact when it comes to general healthcare improvements for the aggregate population. So I think that hopefully provides a little bit of guidance on where the focus is and maybe what the timing of those rollouts could look like.
spk07: Yep, that makes sense. And then on gross margins for 2022, you mentioned we should see a bit of degradation this year due to the shift to wholesale. Apart from this shift, are you seeing any cost pressures from shipping rates, from wage inflation as you build out your pharmacy? Any other cost pressures you're seeing in that line item?
spk12: Yeah. Hi, Dan. This is Yemi. Thus far, we've not seen any incremental pressure beyond just the product mix that we mentioned. Given trends that we saw in the back half of Q4 2021, we have rolled forward many of those assumptions into 2022. I think what I would say to you is that we're very excited to have several opportunities to continue to increase our overall operational efficiency. That does give us the flexibility to potentially accommodate any additional fluctuations, but we'll constantly keep a hold for how the market evolves on that front.
spk04: Got it. Thanks for the cover. Congrats on the quarter. Thank you.
spk01: Your next question comes from the line of Ivan Afinseth with Tegra's Financial Partners. Your line is now open.
spk06: Thanks for taking my question, and congratulations on another great quarter and great year, and congratulations to Yemi and Jay for joining the team. My first question on your retail partnerships, do you have the same products available across for all of them, or are you segmenting in any way, or do you envision segmenting your product line in retail for specific retailers?
spk11: Thanks, Ivan. Appreciate the question. You know, I think generally speaking, we have a lot of consistency across retail partnerships, across both the HIMS and HERS brands, whether it's dermatology products, sexual health, hair care products, vitamin supplements, a lot of consistency. We are seeing, however, you know, desire from retailers to focus and lean into specific verticals within the company. And I think the flexibility that Hoons & Hers offers, the breadth of services and treatments that we offer allow us to work with these retail partners on a fairly personalized basis. So I think there is an increased level of personalization taking place on the shelves, but More so than not, you have a lot of consistency in those 20,000 physical retail locations nationwide.
spk06: And when you bring on or a new retailer brings you on, are they covering all the onboarding costs? Are you sharing any? Are there any onboarding costs?
spk11: You know, given the fulfillment center that we built out in Ohio and the simplicity of the logistics that we have here, having done this with Target for quite a while, it's relatively low cost for us to get these going, which is some nice leverage for the business.
spk06: Okay. And switching to categories, without specifically saying, where do you see the biggest opportunity in the next couple of categories that you could take advantage of?
spk11: Yeah, that's a great question, Adam. I think I'd probably echo what I shared with Dan We're really excited about the categories, both in the core and emerging markets that we're in today, whether that be dermatology, sexual health, mental health. And so big investments in those categories, as mentioned. And then the new categories, things like insomnia, pain management, weight management, and then more chronic conditions such as hypolipidemia are areas that we get really energized by. That's where I think we can kind of point to for some of the categories we believe could be coming down the pipeline.
spk06: And then how do you feel that the brand equity that you have created since the launch of your company can help you best to penetrate those new categories?
spk11: I think what we're seeing is that the consistent investment in that omni-channel brand and the diversity of the brand and who it's targeting and the audiences that I think have trust and relationships with us is paying tremendous dividends, right? I think this is why when you look at Q4 and last year, 2021, we've been able to increase our investment dollars in customer acquisition. We've been able to nearly double our subscription members on the platform. However, we've been able to keep that cost per customer and the acquiring cost for each subscriber relatively flat or improved on a year-to-year basis. I think there are incredible dynamics in the market, iOS 14, privacy dynamics that a lot of people have struggled with. And I think the brand equity, the omnichannel presence, and the diversity of the offering that we have has really helped us surpass those challenges and drive really consistent and accelerated growth.
spk06: This is all great. And one last question. Where are you in your views and progress on insurance reimbursement for let's say, some of the treatment categories?
spk11: It's a great question. I'm glad you asked. We are continuing to invest in that integration on the insurance side. We believe that that's a critical part of having a cost-effective platform for a very wide range of conditions. So I think it's something that you can look to hear from us with confidence in the coming months on where we stand, but very energized by the team's progress on that initiative.
spk01: very good thank you and congratulations again and look forward to another successful year thank you again if you'd like to ask a question press star then the number one on your telephone keypad we'll pause for just a moment to collect any last q a at this time there are no further questions mr j spitzer i turn the call back over to you
spk10: Perfect. Thank you, Emma, and thank you, everyone, for listening in today. We look forward to continuing engaging with you. If you have any questions, please reach out to myself and Drury Yemi, and have a good afternoon. Thank you very much.
spk01: This concludes today's conference call. You may now disconnect.
Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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