Good afternoon ladies and gentlemen, welcome to the Hims & Hers Health Fourth Quarter 2022 Earnings Call. My name is [indiscernible], and I will be your operator today. At this time, all participants are in a listen-only mode and please be advised that this call is being recorded. [Operator Instructions] At this time, I'll turn the call over to Ms. Alice Lopatto, Vice President of Investor Relations. Please go ahead Ms. Lopatto.

Good afternoon everyone and welcome to the Hims & Hers Health fourth quarter and full-year 2022 earnings call. On the call with me today is Andrew Dudum, 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 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 and Investor Relations website at investors.forhims.com. Please also note, we have created a new investor presentation that we hope will serve as a useful resource for both new and existing investors. You can find this on our investor relations website, under events and presentations. 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.

Thanks, Alice. Welcome to everyone joining us. 2022 was a transformative year for Hims & Hers and I’m happy to be with you all today to review our performance and share our perspectives on the future. We are pleased to report an exceptional finish to a record year, headlined by annual revenue of 527 million, more than 1 million subscribers and over 10 million cumulative medical visits since inception, and importantly, the transition to adjusted EBITDA profitability in the fourth quarter for the first time in our company's history. This is an incredible moment for us all that serves as a testament to the strength of our company and approach. We find ourselves at an inflection point in which we're reaping the benefits of our size and scale. We believe our brand awareness and customer loyalty have never been stronger. Our product offerings have never been more expansive and personalized and our platform scale and insights are enabling clinical excellence and efficiency unlike anything in the market today. Even after this quarter of record breaking growth, we’ve significant aspirations for our company's future. In commitment to these aspirations, we set an extremely high bar for disciplined execution across all teams within the organization. This approach is driven by the fact that our mission to help the world feel great through the power of better health is more relevant and essential for customers than ever before. By delivering on this at every level, we can continue taking leaps towards our goal of being a fundamental and beloved part of every household in the country. This mission is deeply personal because we too are customers. This is the enduring power of Hims & Hers. We're experiencing a truly unique moment in history, a moment where customers expect hyper personalization, on-demand access, and…

Thanks, Andrew. Hello everyone and thank you for joining us [today] [ph]. I'll start by providing additional color into our financial performance, including newly disclosed metrics and expand upon Andrew's comments regarding our 2023 guidance and longer-term goals. 2022 was an incredible year for Hims & Hers that saw the [concomitant] [ph] effect of our investments materialized in record performance. This culminated into a strong finish for the year. In the fourth quarter, we continue to drive exceptional growth across our business, while also delivering our first quarter of adjusted EBITDA profitability. Fourth quarter revenue grew 97% year-over-year to 167.2 million. Revenue for 2022 was 526.9 million, up 94% relative to 2021. Throughout 2022, we saw strong momentum from our established offerings such as men's sexual health and hair loss, as well as several of our emerging offerings. Strength in our online channel remained the primary driver of our growth throughout 2022. In the fourth quarter, online revenue increased 106% year-over-year to 161.2 million. For the full-year, online revenue increased 94% year-over-year to 502.5 million. Growth in our online channel is driven by two levers. The first is the footprint of our subscriber base, which is influenced by our efforts to attract new subscribers and retain them. The second is our ability to increase subscriber engagement on the platform, which drives more revenue per subscriber. Our platform has evolved over the years to offer users a broader set of solutions to a diverse set of health and wellness needs. We feel that we will increasingly have the ability to enable services to our users across multiple conditions, elevating the importance of measuring the holistic relationship with our customers. Starting this quarter, we are disclosing the number of subscribers on our platform and will provide this metric on a quarterly basis…

Thank you. [Operator Instructions] We'll take our first question this afternoon from Michael Cherny of Bank of America.

Yes. Hi, good afternoon. This is Ben Clark on for Mike. [Just to] [ph] start from us, just wanted to walk a little bit through the building blocks to get to your fiscal 2025 top line targets. How much of that revenue do you, sort of expect to come from existing products, and how much do you expect will come from new products?

Yes. Hi, Ben. This is Yemi. Thanks so much for the question. There's a few different levers that we expect to pull on over the coming years. The first is, we've seen an immense amount of growth coming from some of the existing categories that we're in on the Hims platform. And so really with the rollout of personalized products, we do expect that many of the verticals on Hims will continue to scale. We also remain excited by the opportunities that we continue to see on the first platform as well. And so, we do expect that over the coming years to scale. Then lastly, as we mentioned on prior calls, we do expect to have disciplined category expansion to the tune of expanding the capabilities of one to two categories per year. And so, really the ability to achieve the long range targets that we set for assume that we're able to continue to pull on each of those levers over the coming years.

Got it. Thanks. And then just shifting gears of fiscal 2023 guidance, how are you guys thinking about macro, if at all, in your guidance? Is there anything that we should be, kind of be thinking about there? Thanks.

Yes, I think that we are cognizant of a dynamic macroeconomic environment. What we've seen thus far throughout 2022 and other periods of economic uncertainty. Is it really the recurring nature of the platform has afforded us some protection? Additionally, in many of the conditions that we're in, we've seen that they've been largely resistant to MACI economic headwinds. And some of that is the result of just the stickiness of the solutions, as well as the diverse consumer set. And so, we would say that our view is balanced. We are continuing to project strong quarter-on-quarter growth, as well as year-on-year growth in 2023. They're not necessarily some of the record level performance that we saw in some quarters in 2022.

Got it. Thank you.

Thank you. We'll go next now to Daniel Grosslight at Citi.

Hi guys. Thanks for taking the question and congrats on the quarter. Your longer-term guidance assumes around 400 basis points of gross margin degradation. And I know you mentioned in your prepared remarks that some of that has to do with the customer experience, but I was wondering if you can [provide] [ph] a little bit of more of a finer point on that gross margin degradation from around 79% to 75% and the cadence of that from 23% to 25%.

Thanks Dan for the question. I can kick off. I think there's a strong desire internally, really to be constantly reevaluating the customer experience and find ways for us to improve it materially. And so, I think there's this engine of personalization and innovation on the product side, on the roadmap where we're trying to create a level of care that is really different from what is traditionally available in the generic markets. And then I think there was also just a general experience improvement that we constantly want to be investing in. And so, I think that's – that speaks to a couple of the points. And Yemi can probably speak to a little bit of the timing of that.

Yes. I think with respect to the timing, I think the factors as Andrew mentioned, that would drive that would be opportunistic from time-to-time in exchange for making the platform sticky. We'll continue to reevaluate some of the pricing options in exchange for longer durations. Additionally, we do expect over time more and more of the ecosystem to be driven by value-added services, as well as the personalized products. And so, really the combination of making those experiences better. It's not as if we're going to see gross margins degrade overnight, but over time as we start to continue to optimize the customer experience, we're likely to see that start to normalize in the mid-70s and embed in our assumption in the 20% to 30% range factors that in.

Okay. Makes sense. And then on marketing expenses, those can be a bit lumpy based on new marketing campaigns. You mentioned you had that new partnership with Kristen Bell. Curious if you're launching any other large marketing campaigns and how should we think about that line item in 2023? Should we see some lumpiness there or are you going to be getting more leverage out of your marketing spend in 2023?

I think we want to leave the flexibility there open for opportunistic investment. I think we've said this in the last call. Dan, there's definitely an opportunity in market right now where we're seeing a fairly unique ability to take disproportionate share as others in the space are retrenching and I think playing a little bit more conservative. And I think the underlying strength of the model and the recurring nature of the business and the strength of union economics that are improving gives us that energy and confidence to continue to lean in. And so, I think we want to maintain that flexibility that Kristen Bell work has proven to be really valuable and we think there are other partners that likely make sense in a similar vein. But with that said, I think we definitely expect as we continue to shift more and more dollars into brand building initiatives and away from performance based channels, there to be pretty meaningful leverage on that line item.

Yes. Thanks for the color.

Yes. Thanks, Dan.

Thank you. The next one is from Jack Wallace with Guggenheim.

Hi, thanks for taking my questions and congrats on another big quarter and close to a fantastic 2022. I'm going to ask another set of questions around the 2025 targets. In terms of the growth contribution, are we thinking in terms of new verticals, are there any one or two that to be outsized contributors? Just thinking of some hot categories that some of your competitors have recently entered, it seems to have reignited growth there? And then second is on the gross margin side. Should we read into that, is there being any more of human capital of costs associated with say more time in patients and care providers? Thank you.

Thanks, Jack. I can probably take the beginning part of that. On the category side, we're seeing very robust growth both from the early [tenure year] [ph] categories traditionally on the men's health side of the house, as well as a lot of the new categories on the Hers side. So, I think at this point still maintain a number of categories with triple digit – mid-triple digit growth rates. And so, a lot of the focus continues to be on better understanding those customers, better segmenting them, and then delivering a roadmap this year of proprietary and innovative products that just add a level of personalization to those customers in a way that make that relationship even stickier and have increased outcomes and really an experience they can't get anywhere else. So, I think there's a balanced effort here of improving the customer experiences for those core categories that have, you know, really rapid scale and are continuing to grow pretty robustly, while also looking and getting excited about, you know, what else to plot form can serve and unlock. And I think to your point, there's quite a lot. I think in some of the materials we released today, there's categories in women's health across digestion, menopause, men's health, testosterone, prostate health, general health such as pain management fertility, cardiovascular, diabetes. These are all categories that over time I believe we will be in and have a very strong presence in. But I think we're just being balanced in making sure that we are continuously improving the core experience of the segments that are growing today and then the recent people are coming to us today. And as Yemi said, you can kind of expect us to act as we have in the past, which is to continue to roll-out meaningfully new categories on a 1x to 2x per year basis, while innovating within those categories on a much more rapid timeline.

And then to hit the second part of your question, Jack, we actually continue to see our cost structure get more and more efficient over time. And so, really what we would look to do is look for again as Andrew mentioned, new ways to improve the overall customer experience, whether that comes in the form of more personalized products, new services evolving our overall offering, that's what we expect to drive more of the movement in gross margin that we expected as opposed to our evolving cost structure. We're actually getting to see more and more efficiency which is showing up in the form of higher gross margin.

Got you. That's really helpful. And then just a quick follow-up on the CapEx. Are there certain maybe robotic processes that you're looking at or I'm just trying to get an idea for what the expansion or the opportunities are that you're looking at that is going to be an incremental to the budget the next couple of years?

Yes, I think at a high level it is to do a few things. It's to, you know, just augment the, you know, given the pipeline of products that we have that are centered on creating a unique experience that's personal for customers. Some of the investment is going towards that, as well as towards just increasing the overall efficiency of our – of the affiliated fulfillment centers since it relates to a combination of [those elements] [ph] that are driving the incremental investment.

Got it. Thanks again and congrats on another great quarter and great year.

Thanks, Jack.

Thanks, Jack.

Thank you. We'll go next now to Glen Santangelo with Jefferies.

Thanks for taking my question. Hey, Andrew, I just want to follow-up on some of the comments you were just making regarding the competitive landscape. As you obviously noticed, right, Amazon sort of not sitting still, people looking at, sort of category expansion at Roman. And I'm just kind of wondering how you view the competitive landscape these days because I think what investors are trying to understand is that's had to those, sort of long-term margin targets, right? It seems like you're clearly getting the SG&A leverage this year right, but people are, kind of looking more at the marketing expense and, sort of thinking about customer acquisition costs vis à vis that competitive landscape. And what maybe is happening with CAC over time?

Yes. Thanks for that question. I think at a high level, we found the market right now to be really advantageous for us, right? And I think you've seen that in Q4 and the quarter before, where we are taking opportunities to lean in and be aggressive and I think take very meaningful market share from the competitors that are very well funded competitors [have] [ph] really strong paybacks, right. Within our capital allocation framework, always maintaining a sub one-year payback period, but doing in a way that's investing in the long-term asset of the business, which is that trusted brand. I think the competitors continue to move as you expect they would, right? I genuinely believe that the industry we're in, this kind of mix between consumer business and healthcare will likely generate one of the largest industries in the country, if not the world eventually and I think some of the largest and most valuable businesses in the world will likely end up in this industry. And so, I think it's probably unexpected to believe that we'll be the only one. But I think we are very clearly blazing that path as the leader and taking that forward. And I think, as long as we continue to focus on those four pillars that I was talking about prior to investing in that trusted brand continuing to innovate on the leading technology, delivering truly innovative products and services and then reinforcing that whole thing with clinical excellence, those four pillars I think really are the bread and butter of what's working and what's delivering a holistic start to finish experience that is really unlike anything in market. And so, that's where we're focused, but I think we're seeing really great dynamics in market that allow our team to be aggressive and to take share in a time where it's a little bit more turbulent for the rest of the industry.

I appreciate those comments. Maybe if I could just ask one quick follow-up. Trying to get maybe a little bit of a better understanding as to which therapy areas might be driving the growth. And I think, Yemi, you sort of called out in your prepared remarks men’s sexual health because we're getting some questions around the average order value, you know up $13 year-over-year 18%, and we're trying to figure out is that a mix issue or is that a price, is some of that price, and some of that multi-month subscription. So, can you give us any color about where the strength is coming from and maybe what's driving that AOV as much as it is? Thanks.

Yes, thanks. Maybe I can provide a little color on the first half. From a growth standpoint, we're seeing strong growth. I think, quite equally between the original, kind of older tenured businesses in men's health, which is usually in things like dermatology and sexual health, as well as a lot of the newer businesses that find itself more on the Hers side of the business. We've said we've got a few businesses now still maintaining mid-triple-digits growth across both Hims & Hers. And so, there's really no single point here that's driving this. This is really accumulation of multiple businesses scaling. And I think this is really the defensible nature of this business, which you are layering very different customers who are coming to us with very different needs and we're servicing those patients with very different treatment plans and have different relationships. And so, that defensibility I think is one of the core aspects of the business. But it really is a combination coming from the traditional and older tenured businesses in Hims, as well as a lot of the newer innovation that you guys have seen from us in the last 12 months to 18 months.

Yes. And then, Glen, to touch upon your question around, you know like what's driving AOV, particularly, we generally not in the habit of directly optimizing for AOVs. Just given the fact that the revenue model is primarily subscription based, our strategy really centers around driving longer, more durable lasting relationships with customers. And so as a result, that focus has resulted in a few things. One is, as mentioned, we continue to see strong multi-month adoption. We also see users opening themselves and being more receptive to engage us across the broader set of conditions. Our strategy is going to continue to be around focusing on building those relationships. And so, that's what to draw in new subscribers, as well as retain the existing subscribers on the platform as well as just expand the revenue that we generate per subscriber.

Okay. Thank you very much.

Thank you.

We'll go next now to Jonathan Yong with Credit Suisse.

Hi, thanks for taking my question and congrats on a strong quarter here. Just going to your 2025 targets, as you think about balancing growth versus profitability and points or comments about some retrenchment by some of your competitors. How do you think about possibly accelerating the revenue growth perhaps maybe pulling back on the EBITDA side, maybe launching more categories through 2023 or through 2024? Just want to get a flavor of how you're thinking about that, if the opportunity represents itself to you in the next year or two?

Yes. I would say that, I think we continue to be very much focused on optimizing and acquiring more of the tenants in front of us. That said, I think as we've been able to demonstrate throughout our history, we really have the ability to do both given the uniqueness of the model, given that we oftentimes are able to benefit from economies of scale unlocking new efficiencies across the business as we scale. What you do see is that we get leverage across certain areas, both in G&A, as well as our variable expenses. I think that that's what gives us the conviction if it's for not just a revenue target or not just an EBITDA target. It's a little bit more mid-to-long term in nature, but really to be able to do both. Just because we do have the conviction that the model affords the ability to see expansion across both areas. So, you can continue to expect us to lean in to identifying and investing categories where it makes sense. That said though, we also are confident in the ability to continue to drive more and more EBITDA onto the platform as well.

Great. And then just going to the customer experience investments that you're doing. When you think about those investments, is it really to drive, kind of to top line growth or is it to improve retention or maybe it's a combination of both just how you're thinking about where the benefits of that will come from? Thanks.

Yes, it's a great question. I think we really look at it through the lens of better treating patients on the platform, right? And providing products and services that increase adherence, that deliver outcomes, that have more efficacy, and that deliver experiences that patients frankly love, right, and that they as a result, you know, really stick to and share with their friends and family and, you know, have as a meaningful part of their lives. And so, I think a lot of that ends up long-term as driving aggregate [LTV cohort] [ph] improvements, but really improved activation and improved retention rates over time. But a lot of it, I think is looking at it through the lens of how do we improve customer outcomes? What are the reasons patients are struggling? Currently, how do we make that simpler what are the dynamics that patients don't like and what are their preferences and how can we improve those? What are the clinical options we have to drive better outcomes or do side effect profiles? I think those are a lot of questions that we're asking on the customer support side that ultimately just results in a much happier customer, a much longer tenure customer and long-term a much more valuable customer.

Great. Thank you.

Thank you. We go next now to Jaialendra Singh at Truist Securities.

Hi. This is [Julian] [ph] on for Jaialendra. Thanks for taking my question. So, I understand you're no longer providing specific figures for multi-month [insurance] [ph]. So, just wanted to know like what are the percentage of multi-month orders continuing to trend upwards each quarter above, I think, 36% and that churn has improved from mid-single digits percent monthly?

Yes. So, I think what we have disclosed in our materials is the ratio of subscribers that have a multi-month relationship with us relative to those that are more on a month-to-month. Currently, we have north of 70% of our users are on the multi-month – or on a month-to-month model. And then to your second question. Andrew, do you want to take that one?

Sure. Sorry, I didn't get the first part of that – for the second part of that, I'm sorry. Do you mind repeating it?

Whether churn has improved from the mid-single-digit percentage monthly?

Yes. We haven't reported on the monthly side, but continue to see really strong long-term retention rates in the north of 85%, which is what we reiterated this quarter.

Okay. And then just quickly, what are your thoughts on the sides of administration's proposal last week, which would require patients to see a doc in person before getting attention deficit disorder medication or [indiscernible]. Just kind of wondering what kind of percentage of your business today is tied to those kind of prescriptions?

Yes, that's a great question. We currently do not offer any type of controlled substances on the platform. They're not permitted in any capacity. And so, there's no part of the business today that would be affected by the Biden administration's proposal that came out last week.

Alright. Thank you.

We'll go next now to Jonna Kim at Cowen.

Thank you for taking my questions. Congratulations on a nice quarter. Just wanted to maybe get more thoughts on the retention rate you were talking about. How does the retention rate differ by single month versus multi-month? And what are some key strategies that you have in place to drive higher retention across different cohorts? Thank you very much.

Yes. So, we generally see for multi-month, the retention rates are higher. For many of these conditions, they are chronic in nature, but for some of them, for instance, using hair loss as an example, it does take time to see the results show up. And so, they're committing to multi-month. We generally see that those users are stickier. Many of the initiatives that we have had around retention have really just centered around evolving the customer experience. So, making it easier to switch, for instance, to a different cadence or your treatment. Also just having on the platform, the end-to-end experience where you're able to solicit help and have a timely response. And as mentioned in the prepared remarks, we're continuously looking for ways to evolve that customer experience to further increase the overall stickiness on the platform.

Alright. Thank you.

Thank you. We go next now to George Hill at Deutsche Bank.

Good evening, guys and thanks for taking my question. I guess, Yemi and Andrew, I'd start off with how would you guys characterize your visibility to the long-term guide? And I guess, do you think of it as a one end of the spectrum is conservative, the other end of the spectrum is aspirational? And kind of I'd be interested in your comments on the thoughts of putting it – just in general, putting it out there, given the uncertainty of the environment that we're in.

Yes. Thanks, George for the question. I would characterize it as reflective of what we think is reasonable for the business to achieve given the current trajectory of what we see today. And so, I think we intentionally put out there that we think this is – a revenue number of at least 1.2 billion and an adjusted EBITDA number of at least 100 million. So, do think that the business can achieve this. We think that, hopefully, the business can surpass it. But it's fairly representative of the growth we see under the hood today and I think also representative of the, really robust innovation pipeline that we have in the works, both for this year and next year on the proprietary product side across categories and new categories that we think are going to unlock quite a lot of new customer segments and also drive engagement and retention pretty powerfully. And so, maybe that's a little bit of color to [provide over] [ph]. I don't know, Yemi, if there's anything you'd like to add?

Yes. No. Nothing further from my end.

Okay. And then if I could hop in with a follow-up on the new men's product that you guys launched. I know that you talked about the gross margin erosion over the next couple of years as we look out to 2025, if we compare the Mints product to what I would call like the standard generic ED product, is that product gross margin accretive or dilutive? And I guess, can you talk about – do you see a lot of opportunities in other product categories to use formulation as a way to, kind of drive pricing maybe gross margin expansion?

I'll take the first part of that question and maybe hand it over to Andrew to take the second part. I think over time, we do expect that we have the ability to achieve similar gross margins on the personalized products that we do for more of the generic based products. The gross margin dynamics that we talked about were really just around having line of sight into the flexibility to offer consumers more and more capabilities onto the platform. And so, I think as we look at around how things are likely to evolve, really just having that flexibility is where we see the – some of the gross margin dynamics that we referenced earlier come from.

Yes. And to your question, George, about formulation opportunities. I think the answer is absolutely. This, I think, was key to the large strategic purchase of Apostrophe and that compounding infrastructure in pharmacy a couple of years ago. We have always believed that personalized medicine will deliver much better outcomes for patients. And that could be in way of form factor preference. It could be in the way of optimizing side effects by improving different dose dynamics or it could be in the way of optimizing clinical outcomes through different formulation combinations where it makes sense. And so, I think giving the providers on our platform and the patients on our platform increased capabilities to optimize personalized solutions for them, and that means formulation and form factor in a lot of situations across the businesses we're in and across the future businesses we're going to launch into is a huge opportunity. And again, I think this just really reinforces a lot of the investments we've been making across the stack to improve the customer experience in such a way where patients really can come to us and know that not only are they going to get the best clinical care, but they're also going to get products and services that are truly proprietary and unique to our platform and unavailable at other places in market.

Okay. That's helpful. Maybe just a really quick follow-up. Just can you comment on uptake of the mix? Has it been kind of – I know it's early, but kind of met expectations, surpassed expectations?

I think we have very high expectations. And I think they're meeting them. There's been strong adoption and strong engagement just in the last few weeks since getting those out. So, has given the team a lot of energy and excitement to keep pushing forward.

Okay. Thank you.

Thank you. We go next now to Korinne Wolfmeyer at Piper Sandler.

Hey, good afternoon. Congrats on a great quarter and thanks for taking the questions. So first, I'd like to, kind of, I guess, piggyback on that last question, but address some of the newer products that you've been launching, such as like the shampoo and the conditioners. Are you viewing these as more so market expansive and being able to tap into a broader customer base or are you seeing existing customers start tacking on these other products that you're launching into their current orders? Any color there would be helpful. Thank you.

Yes, that's a great question. I think it's a mix of both. We see similarly in the retail channels, which we continue to invest in for the most strategic partners. Being on shelves and having OTC product breadth for customers allows them to have an introductory relationship with Hims & Hers. And I think as we invest in brand building initiatives and an omnichannel presence and the ability to touch and have deep relationships with these patients, those products in a lot of ways are sometimes less intimidating and more accessible and first start products. So, I think that's definitely a part of it. And then I think it's probably equally weighted that patients that are coming to us and are getting personalized prescription, pharmaceutical products to the platform and getting treated with specific issues. Often ask for and desire complementary products that work with that regiment. So, having a prescription made topical spray, let's say, for a woman who's experiencing hair loss postpartum, that woman is also going to ask us what is the right shampoo, what is the right conditioner that can also boost volume and boost thickening and help regrow. And so, the ability to have that assortment, that proprietary assortment and the breadth of products, I think, ultimately does drive increased bundled value and average order size in a way that it is incrementally pretty meaningful to the business.

That's really helpful. Thank you. And then if I could just push you a little bit more on the 20% to 30% EBITDA margin guide that you put out for the longer-term, can you just talk about how far down the road is that? I mean you gave us some 2025 targets, but seems like we're not quite there, although those are at least $100 million EBITDA, but just how are we going to get to that 20% to 30%? And how far down the road do you think that really is? Thank you.

Yes, sure. Thanks for the question. I'd say that I think we have direct line of sight to continue to get leverage on many of the line items that we've seen leverage on already. So, we do expect to continue to be very disciplined in the way that we grow our G&A footprint. So, you can expect us over the coming years to get leverage on that side. We see a lot of things that are very exciting on our variable costs that primarily show up in operations and support. And so, over the coming years, we'll continue to get leverage there. Then we'd also expect to see is, right now, we're currently investing in acquiring more and more customers onto the platform, also investing across a breadth of categories, but what we do see over time is that the base of the existing customers that we have is also rapidly growing. As a result, that also drives just a ton of leverage and efficiency across the business. And so over time, what we would expect is, we would start to get leverage on the marketing line as well. Realistically, we're probably looking at, at least probably a 5-year plus horizon, I'd say, 5 years to 10 years to truly probably hit the that type of concept. But really, it’s going to be a straight off between how we make the investments versus how we continue to see our base evolve and mature. Q – Korinne Wolfmeyer: Fair enough. Thank you.

And we'll go next now to Ivan Feinseth at Tigress Financial.

Thank you for taking my questions and congratulations on another huge year. I have two questions. In your projections going into 2025, does that 1.2 billion include any possible M&A or that would be if you were to make an acquisition be in additional to that?

Thanks, Ivan, for the question. This is really representative of the organic trajectory of the business. So, it does not take into consideration any opportunities on the M&A side that might pop-up in the next couple of years.

Are they not giving specifics, but let's say, what would be, let's say, some of the other areas that you would like to expand into?

From a category standpoint, I think on the investor presentation that we released, that's up on the investor website right now. We outlined a couple of prospective markets that the team is really energized by. On the men's health side, this is things like prostate health, testosterone. On the women's health side, you're talking about things like menopause and digestion. On mental health, there's quite a bit in – still to unlock in customers struggling with insomnia, PTSD. And then in more general health, pain management, fertility concerns for men and women, weight and metabolic health, cardiovascular, diabetes. I know that's a lot, but I think the honest answer is, those are all categories the team is looking at and spending a lot of time in. And for us, it's really not a question of if we're going to launch in any of these categories. It's really just a question of when and how, right. I think we have a desire to bring to market products and services that truly are innovative and truly personalized. And so that means not necessarily rushing out the door with a new medicine once it's been approved, it means actually thinking about how we deliver that to patients in a way that's improving their outcomes and their preferences and ultimately, the relationship we have with them. And so, those are a lot of categories, but I think it's just a matter of time between us and launching them. And it's just a question of how we bring them into market in a way that we feel is very much representative of the Hims & Hers approach.

Okay. And my other question is, like since bringing on Kristen Bell as spokesperson, what kind of impact have you seen or how do you measure that? And then, like what were some other types of people – like types of areas in similar roles that you would look to expand into?

Yes, it's a great question. I think Kristen is a unique example in that, she is so authentically and courageously speaks to her struggles over the years with depression, anxiety. And I think that authenticity is really powerful for men and women to hear, especially for categories that are, in a lot of ways, full of shame and highly stigmatized. And despite the fact that huge portions of the country suffer from them, very few percent of those people actually go and get treated. And so, we've seen really strong results on the brand building side for Kristen. A lot of people are seeing that message, and it's resonating with them and coming and be encouraged to evaluate solutions for them. And so for me, I really think of our biggest competitor as somebody who is just reluctant to take that first step, right? The majority of people that come to us are first-time buyers, right? They're really seeking information, and they're trying to learn about options available. They're not coming from a different competitor or a different health system. It's somebody who's currently outside of the system who's now opting in with Hims & Hers. And so, I think celebrities and athletes and people of high influence have this ability to be that nudge that encourages people to take the first step and normalize the realities of whatever they might be struggling with and then go learn and hopefully take care of it and ultimately feel better. So, I definitely think we're open to more partnerships like Kristen. We're looking at a lot of different options across categories that have those dynamics. So, I definitely think it's something you could expect from us in the years to come.

Thank you. Congratulations again. Wishing you a big 2023.

Thanks, Ivan.

And we go next now to Joy Zhang at SVB Securities.

Hi, guys. Congrats on another strong quarter and thank you for taking my question. In your prepared remarks, you had some comments on, sort of the specificity in [customer segmenting] [ph]. So, can you give us an update on the profile of your, sort of typical customer in terms of age, gender, geography, et cetera? And has that profile of the typical customer changed at all over the past few years as you've expanded into more categories? Thank you.

Thanks, Joy. It's a good question. I think there's a really unique part of this brand that attracts a very wide spectrum of customers. And so, I think in those remarks, what I was talking about, the customer specificity, which is a tough word, is the ability to identify within the wide spectrum of patients that are coming to us, very specific needs within those patient groups and how treatments and content and therapies can be improved and personalized for that specific patient. So, I'll give you an example. On the women's mental health business per se, right, you have women that are struggling with anxiety who are in their late teens and early 20s. You have women struggling with anxiety depression, postpartum. You have women struggling with anxiety and depression as they're approaching menopause and through menopause. The actual care that's appropriate for each of those women at each of those stages is likely very different. And so, being able to better segment and understand the specific needs of those patients, specific treatments, digital therapeutics, content, et cetera, that could be helpful. And even underlying conditions that might be completely different that we could help address, like that's a really big part of it. And so the brand right now is attracting a very wide spectrum of men and women. There truly is no Hims & Hers customer. There's no single age. There's no single demographic. It is incredibly vast and broad across all swaths of people. And I think that's actually one of the most powerful parts of the business is the brands resonate across many, many generations. And so, that's continuing to grow. And I think as we launch more categories and get better at customer segmentation and better at brand building, I think you'll see that expand even further in a place where eventually an entire family, an entire household could be a customer of Hims & Hers and likely the grandparents and great grandparents. And so, I think that's kind of the ambition and the trends that we've seen so far.

That's super, super helpful. Thank you. And as a follow-up, maybe I'll just tag on another gross margin question. Can you update us on, sort of what percentage of your prescription volume today is done through the in-house fulfillment centers? And how much juice is there left to squeeze in terms of margin benefits from that going forward?

Yes, it's a great question. I think we disclosed in the latest presentation that's north of 55% of the business is being fulfilled through the affiliated pharmacies. And so, there's still quite a bit left to go, which is great, and there are quite a bit of opportunities to streamline the margin profile and the efficiency of that remaining percentage. And so, improving quite a bit, but still quite a lot of opportunity on the horizon for us to drive efficiency.

Alright. Thank you.

Thank you.

Thank you. And ladies and gentlemen, that will conclude our question-and-answer session today, as well as bring us to the end of today's conference call. Again, we'd like to thank you all so much for joining the Hims & Hers Health fourth quarter 2022 earnings conference call and wish you all a great remainder of your day. Goodbye.