Hims & Hers Plunges as Amazon Muscles into Telehealth

Shares of Hims & Hers Health (HIMS) plummeted 25% on Thursday and extended their losses by another 5% on Friday, following Amazon.com‘s (AMZN) announcement of its new telehealth service. This service introduces an appealing proposition for consumers with low, upfront pricing for clinical visits, treatment plans, and complimentary medication delivery specifically for Amazon Prime members. This initiative targets a spectrum of common health, beauty, and lifestyle issues, directly competing with Hims & Hers’ business model.

Hims & Hers Health has built its reputation by connecting patients with licensed healthcare professionals via an online platform, facilitating access to treatments for various conditions. The platform’s model involves personalized treatment plans, often at a premium, which has contributed to the company’s growth, particularly this year. Shares of Hims & Hers have more than doubled, buoyed by the introduction of compounded GLP-1 weight-loss injections like those similar to Novo Nordisk’s Wegovy.

Amazon’s entry into this space with a focus on affordability and transparency is seen as a formidable challenge.

Leerink Partners analyst Michael Cherny noted, “Amazon’s rollout appears to offer a similar idea of convenience at what appears to be a lower price point across the board. We don’t know how successful it will be, but also note that this is a serious competitive threat being introduced to the market.” This statement highlights the potential for Amazon’s pricing strategy to attract customers away from Hims & Hers, given the option for consumers to view both consultation and medication costs upfront before proceeding with care.

Citi (C) analyst Daniel Grosslight echoed these concerns, stating, “Given Amazon is offering much more compelling prices than Hims & Hers on most treatments, we do think this is a threat to Hims’ core offering.” His comments underline the competitive pressure Hims & Hers might face, especially in price-sensitive markets. However, Grosslight also pointed out that this competitive move by Amazon could emphasize the value of Hims & Hers’ strategy to offer personalized treatment through compounding, potentially differentiating it in the market.

The introduction of Amazon’s telehealth service does not only challenge Hims & Hers on price but also on accessibility and convenience, leveraging Amazon’s vast logistics network for medication delivery. This could pressure Hims & Hers to innovate further or adjust its pricing strategy to retain its customer base against a giant like Amazon, known for its aggressive market strategies and broad consumer reach.

The reaction in the stock market reflects investor concerns about how Hims & Hers will adapt to this new competitive landscape. While Amazon’s service promises straightforward pricing and ease, Hims & Hers’ focus on personalized care might still hold strong appeal for consumers looking for tailored healthcare solutions. The company’s ability to maintain its growth trajectory amidst this competition will largely depend on how it leverages its unique selling propositions like personalization and the compounding of medications, which cater to individual health needs in ways that a more generic service might not.

Price Action: As of press time, HIMS is trading at $19.73, down roughly 5.5% intraday, while Amazon is at $202.60, down $8.78, or 4.16%.

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