Hims & Hers has also been spending time to verticalize its business:
- For example, it’s gradually shifting its pharmacy fulfillment services in-house, away from its Truepill-powered operations.
- And it’s been expanding its product lines. It acquired virtual dermatology startup Apostrophe and UK-based virtual hair loss clinic Honest Health in June 2021, and expanded its digital mental health offerings in July 2021.
Trendspotting: D2C healthcare companies are on a growth tear—Hims & Hers is just one of the most notable key players.
- In H1’ 2021, over one-quarter (27%) of all funded digital health companies were operating solely on a D2C model, up from 22% of cash recipients last year, per Rock Health.
The appeal of D2C healthcare: For consumers, subscription-based healthcare can be a more affordable option than the traditional care funnel. Meanwhile, D2C companies and investors can quickly reap returns without dealing with administrative hoops of the traditional healthcare chain (involving insurers/employers, for instance).
The challenge: While the D2C healthcare model can ease access to healthcare for consumers, it also creates unique challenges.
- For example, since D2C companies rely on widespread marketing to capture customers. That means they have to deal with high customer acquisition costs compared with traditional providers who already have built-in channels (insurance) sending patients their way.