Hims & Hers Health, Inc. Q1 FY2023 Earnings Call

Ladies gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Hims & Hers First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. It is now my pleasure to turn today's call over to Alice Lopatto, Vice President of Investor Relations. Ma'am, please go ahead.

Good afternoon, everyone, and welcome to the Hims & Hers Health First Quarter 2023 Earnings Call. On the call today, our prepared remarks will be presented by Andrew Dudum, Co-Founder and Chief Executive Officer as well as Yemi Okupe, our Chief Financial Officer. Before I get 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 statements 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 tables 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. After the call, this webcast will be archived on the website for 12 months. Before jumping into our results, I wanted to note that Andrew is currently on paternity leave and our prepared remarks are prerecorded. Following these remarks, Yemi will host the live Q&A. And with that, I'll now turn the call over to Andrew.

Thanks, Alice. Welcome everyone and thank you for joining us. 2023 is off to an incredible start, as we made significant progress towards our mission of helping the world feel great through the power of better health. The momentum of our business model is stronger than ever. Strong execution across our four strategic pillars—trusted brands, leading technology, innovative products and services, and clinical excellence—is enabling us to draw in more consumers and emerge as a leader at the forefront of an immense opportunity. When we look at our market opportunity, there are more than 100 million Americans suffering from a chronic condition, and in some cases as high as 90% of the population have yet to be treated. These statistics are staggering and they highlight why our mission is so crucial. Therefore, we are not just focused on providing access to treatments. We are also dedicated to empowering people to take charge of their own health and well-being through a trusted and beloved brand. We believe that by helping people make positive changes in their lives, we can make a meaningful impact on the health and happiness of millions of people across the world. Now diving into the details of our first quarter results. In the first quarter, we generated revenue of $190.8 million, up 88% year-over-year driven by our growing subscriber base of over 1.2 million subscribers, up 87% year-over-year. We achieved these strong growth rates, all while increasing adjusted EBITDA by $2.2 million over the fourth quarter to $6.1 million in Q1. These results are in large part due to over 90% of our Q1 revenue coming from online recurring subscriptions. Our ability to execute on our mission is powered by our four strategic pillars. These pillars create a powerful network effect that starts with our trusted brand, which drives consumer demand. Through the growth of our consumer base, we are able to gather insights and feedback to garner better personalized customer care and preferences that help us refine our technology platform, which then informs our product roadmap to deliver access to more personalized products and treatments. All of this is done in partnership and collaboration with leading clinical and pharmaceutical specialists, enabling an experience which we believe is unlike any available in the market. The development of our trusted brand is critical to our ability to drive and retain consumers on our platform through increased awareness and deep relationships. It allows us to secure strategic partnerships with leading retailers and celebrities. These partnerships enable us to deploy a powerful omni-channel approach, reaching consumers at multiple stages and in multiple forums during their journey towards improving their health and wellness. In the first quarter, we partnered with Kristen Bell as our mental health ambassador for the Hers platform. Kristen's reputation as a trusted figure and her ability to authentically talk about her mental health struggles resonated with customers and made dealing with mental health challenges more approachable for thousands of people. This paired with our multi-platform marketing approach resulted in record level acquisition in our Hers Mental Health offering for the first quarter. Our platform has enabled the Hims & Hers brand to scale across numerous offerings, including men's health, women's health, dermatology, and now mental health. With our diverse offerings, we are able to speak to a broader set of consumers earlier in their health and wellness journey in an efficient manner. Our multi-category campaigns have been instrumental in building awareness of the wide array of solutions on our platform. We are excited to continue this momentum and create more engaging content that speaks to the needs of our customers across different conditions. As our platform continues to scale, we will deploy our leading technology to leverage unique insights, delivering access to world-class care for our customers and best-in-class tools for our providers. In the first quarter, we made a number of updates to our platform to ensure customers have an easy-to-use, educational, and personalized experience. The rollout of account management tools made it more seamless for our consumers to get the treatments that they need at the cadence of their desire and in a broader variety of form factors to meet their needs. Additionally, we are pleased to see conversion across several offerings increase as consumers experience more personalized and specialized onboarding experiences. Through the power of scale, our platform generates insights that enable us to deliver an expanding number of innovative products and services that customers love. Our over-the-counter products are a great example of this and have become increasingly popular, especially our hair care products. In the first quarter, we added a new anti-dandruff shampoo for Hims customers, which expands our existing line of men's hair care products and can be bundled with our prescription offerings. Moving to our more personalized products, we strive to provide customers with access to treatments that fit in their diverse needs. In February, we launched Hard Mints by Hims, a personalized men's sexual health solution, which was met with tremendous consumer response. The ability to obtain a customized treatment, beautiful and discreet packaging, and best-in-class provider services resonate with our consumers. We feel that personalization of products and services is the way of the future, and you can expect more launches from us throughout the year. In the second quarter, we expect to expand access to personalized solutions for hair re-growth on the Hers side of the business. It is often believed that hair loss is caused simply by factors like aging or stress; it is not necessarily understood as a medical condition that could be treated. From our customers' feedback, we have learned that this can lead to women feeling anxious and ashamed. We are incredibly proud to be working on future offerings that provide a more personalized treatment to help remove barriers around seeking help. Finally, we view the integrity of clinical excellence on the platform as critical to every decision we make. In the first quarter, we deepened our medical bench with the addition of Dr. Dan Lieberman as our SVP of Mental Health. Dr. Lieberman will oversee our psychiatry and mental wellness strategy, working to ensure this offering continues to maintain high clinical excellence as we work towards more innovative solutions for customers. We are confident in our platform's ability to help users access treatment across a broader set of conditions. Medical expertise to ensure both efficacy and safety is central to our ability to do that effectively. That is why we've added five new experts to our medical advisory board that bring expertise across conditions such as weight management, menopause, and cardiometabolic health. We are proud of the execution at the start of this year across our four strategic pillars, and the strong performances come as a result. This has enabled us to attract talent at all levels of the organization. In our first quarter, we welcomed a new SVP of product and continued to further augment leaders across each of our functions. Additionally, Christiane Pendarvis joined our Board of Directors. Christiane brings over 25 years of experience leading global consumer and retail brands, including Old Navy and Victoria's Secret, and is a proven customer-centric leader with a track record in helping brands drive growth. She's currently the Co-President and Chief Merchandising and Design Officer for Rihanna's Savage Fenty, a revolutionary intimate apparel brand known for its focus on inclusivity. In just a short period, Christiane's expertise has added significant value as we work to help the world feel great through the power of better health. We made significant progress in Q1 across all facets of the business and have tremendous confidence in our ability to continue to expand our market leadership position and drive long-term growth. Given the strong customer demand we're seeing and the scale that we are generating, we are raising our 2023 guidance and now expect to achieve revenue growth of 54% to 58% and adjusted EBITDA profitability of between $25 million and $30 million. Our platform is scaling in a unique way that is enabling us to leverage economies of scale that we believe few others can. Over 60% of our orders are fulfilled through affiliated pharmacies, and we expect that number to continue to increase as we progress throughout the year. We're excited to reinvest back into the customer experience in a way that drives more value to a broader consumer base in a way that is truly unique. I want to especially thank our teams throughout the organization for their passion and hard work, which is helping us drive robust and consistent results across the business. Equally important, we greatly appreciate the continuous support of our customers and shareholders. We look forward to delivering strong growth and profitability in building increased shareholder value for all of our stakeholders over the long term. Now, I'll turn the call over to Yemi to discuss the financials and provide more detail on our increased outlook for 2023.

Thanks, Andrew. Hello everyone, and thank you for joining us today. I'll start by providing additional color on our financial performance and expand upon Andrew's comments related to our past performance and future outlook. We are proud of our results in the first quarter, which showcased the power of our flywheel across our four pillars at work and, through it, our ability to drive both higher revenue and adjusted EBITDA. First quarter revenue grew 88% year-over-year to $190.8 million as longer-tenured offerings and men's health continued to exhibit strong signs of growth, with some offerings even experiencing accelerating growth. This indicates that we are just scratching the surface of the opportunity and with continued innovation and execution we believe we have a long runway ahead of us. Additionally, we see many of our more recently launched offerings across our platform continuing to scale. This signals that we have a robust pipeline of newer offerings with significant potential for the foreseeable future as well. Similar to prior quarters, revenue growth was primarily driven by our online channel. In the first quarter, online revenue increased 96% year-over-year to $184.2 million. Growth in our online channel was driven primarily by an increase in our subscriber count. In the first quarter, subscribers grew by 169,000 quarter-over-quarter to over 1.2 million, representing an increase of 87% relative to the first quarter of 2022. Our omni-channel marketing strategy, which includes partnerships with leading retailers and celebrities like Kristen Bell, is enabling us to engage with consumers on more platforms and reach them at earlier stages in their health and wellness journeys. Strong subscriber growth is a signal that the combination of our omni-channel strategy, seamless onboarding, and account management features are working as intended. We look forward to continued innovation across each of these areas. Online revenue growth also benefited from higher monthly online revenue per average subscriber. Monthly online revenue per average subscriber in the first quarter was $55, up 6% relative to the first quarter of last year. Higher revenue per subscriber demonstrates that we're able to continue to expand our subscriber base while also maintaining high subscriber quality. We are pleased to see our user base continue to express interest in establishing long-term relationships with us. The share of multi-month subscribers increased to an all-time high of 75% in the first quarter. Wholesale revenue was $6.6 million, representing a modest decline of 9% relative to the first quarter of 2022. Efficiency across the organization is at an all-time high. We surpassed 60% of orders fulfilled through our affiliated pharmacies in the first quarter of 2023, and we expect over 80% of our orders to be fulfilled via affiliated pharmacies by year-end. The combination of longer duration subscriptions and an ability to capture increased benefits from economies of scale resulted in more than a 1 percentage point quarter-over-quarter increase in our gross margins to 80% in the first quarter. We are pleased by the strong execution of our operations team and expect there to be more opportunities to unlock in the future. However, we have actively started to test ways to strategically redeploy a portion of these gains into improving the overall customer experience. As those efforts scale, we expect gross margins to normalize in the mid-70s. Shifting gears toward other elements of our cost structure: marketing as a percentage of revenue, excluding stock-based compensation, in the first quarter was 50%, stable with the fourth quarter. Increased investment was made in the first quarter toward educating users earlier in the lifecycle around the offerings across Hims & Hers, as well as in our partnership with Kristen Bell. Many of these investments are longer-term in nature. We are pleased by the recent success of our efforts. As such, we'll be investing opportunistically to expand awareness of our newer products and offerings, as well as ensuring our voices are heard across the most culturally relevant moments in society. No change will be made to adherence to our capital allocation model, which calls for a payback period of less than one year on our collective marketing investments. Operations and support costs as a percentage of revenue, excluding stock-based compensation in the first quarter came in at 13%, stable with the fourth quarter. Moving forward, we expect to see efficiency gains as a result of greater fulfillment via affiliated pharmacies, benefits from economies of scale, and leverage on overhead. Technology and product development costs as a percentage of revenue, excluding stock-based compensation, came in at 5% in the first quarter, payable to the fourth quarter. We expect investment in this area to expand as we launched new technologies on our platform to provide improved customer experiences and enable us to better incorporate feedback to improve our products and services. General and administrative costs as a percentage of revenue was 16% in the first quarter, representing a 6-point improvement relative to the first quarter of 2022 and flat with the fourth quarter, as we ramp up headcount growth. Excluding the impact of stock-based compensation, G&A costs were 10% of revenue in the first quarter, representing a 5-point year-over-year improvement from 2022. Given the growth of our platform, the reality is our organization will also need to grow. However, we will continue to grow in a disciplined and thoughtful way. As such, we see further opportunity for leverage on our G&A expenses in the future. Solid execution and disciplined expense management enabled us to increase adjusted EBITDA by $2.2 million quarter-over-quarter to $6.1 million in the first quarter. Adjusted EBITDA margins were 3% in the first quarter, representing an improvement of 1 point relative to the prior quarter, a 9-point improvement to the first quarter of 2022. Our adjusted EBITDA performance enabled us to drive cash flow from operations in excess of our capital expenditures. This resulted in a $4.8 million quarter-over-quarter increase in our cash and short-term investments to $184 million. As previously mentioned, 2023 is off to an incredible start. The strength of our flywheel only continues to increase. More consumers than ever are choosing Hims & Hers as a result of our trusted brand. Our technology enabled us to provide them with access to personalized solutions and treatments and direct response to their feedback, which we feel will result in increased adherence and better outcomes. At a time when others are pulling back, the resilience of our consumer base and durable recurring revenue model enable us to lean in. Strong efficiency across the organization has allowed us to effectively reinvest and lock in an ability to establish a leadership position in a market that we feel has substantial opportunity. We see consumers increasingly seeking personalized products and services on our platform and are energized by the pipeline of what is to come. Given the strong performance in the first quarter, the recurring nature of our business model and all of the aforementioned dynamics, our perspective on the trajectory of our business in 2023 has meaningfully changed relative to last quarter. We have made substantial changes to our 2023 outlook to reflect these dynamics, which I will now walk through. In the second quarter, we are anticipating revenue in the range of $200 million to $205 million, representing a year-over-year increase of 76% to 81%. On the bottom line, we expect adjusted EBITDA to be between $4 million to $7 million, representing an adjusted EBITDA margin of 3% at the midpoint of both ranges. For the full year, we are anticipating revenue between $810 million to $830 million, representing a year-over-year growth rate of 54% to 58%. The midpoint of our updated range is $75 million higher than our prior range, reflecting the previously mentioned dynamics. We have narrowed our 2023 adjusted EBITDA range to $25 million to $30 million reflecting higher top line and increased efficiency balanced by increased investment to take advantage of market opportunities and improvements to our customer experience. These adjusted EBITDA and revenue ranges result in adjusted EBITDA margin of 3% at the midpoint of both ranges. The assumptions behind our full year outlook remain unchanged. As a reminder, these are: we are able to maintain long-term retention rates above 85%, we continue to achieve payback periods of one year on our marketing investments, and we start to see traction with an expanding portfolio of personalized products and services that we expect we will continue to launch throughout 2023. We are pleased to kick off the year with such powerful momentum. Our ability to drive strong and profitable growth is a clear signal that our capital allocation strategies and flywheel are forming a magical combination as the year progresses. We look forward to updating you on our performance and continued progress across our strategic pillars. Our ability to drive strong results is powered by those that support us. I'd like to thank our customers, partners, and employees for helping us deliver these outstanding results, and we look forward to continuing to update you on our progress. As a reminder, I will be hosting the Q&A this quarter as Andrew is currently on paternity leave.

Your first question is from the line of Jack Wallace with Guggenheim Securities. Your line is open.

Congrats on a great quarter and congrats to Andrew and his family. That's amazing news. Yemi, just wondering if you could give us some color on how the yields on your CACs spend have trended over the last, say, four to six quarters, and thinking about the mix shift from away from the targeted digital ads towards more brand awareness TV campaigns and some of the ambassador that you brought online, including Kristen Bell. Any color that would be very helpful?

Hey, Jack, thanks for the question. I think it's natural for it to fluctuate from quarter to quarter. Throughout late last year, as well as through the early part of this year, we did see CACs become quite favorable. As a result of that, we talked about how we leaned in during the back half of last year. We continued to do that in the first quarter of this year, but really what we're starting to do is rectify the number of channels that we're in. What you can expect from us is to continue to lean more into the ambassadors as well as the brand awareness campaigns. Our belief is those will generally take a longer time to pay back as long-term investments. That said, I think collectively, we're still confident in our ability to maintain the one-year payback period. With respect to the environment that we've seen thus far in 2023, it has been quite favorable, but we're proactively leaning into some of the other channels just to bring people in earlier in their life cycle. We expect to continue to do that throughout the year while also maintaining the one-year payback period.

And then, can you give us an idea for the uptake of your proprietary products versus, say, some of the legacy products, considering existing customers switching where appropriate, as well as the mix of products that are being prescribed to your customers?

Yes, that's a great question. I think for some of the longer tenured categories where proprietary products have been present, we do see actually the majority of users opting in for those products. Many of those would be in the dermatology space. In Q1, this was the first quarter that we rolled out proprietary products in our sexual health category. For new users, we saw adoption that was substantially faster than we expected. We continue to believe that we'll see the same success not only in sexual health but in some of the newer offerings we expect to launch throughout the year. Shortly, we expect this quarter to launch offerings across the Hers hair business as well.

Your next question is from the line of Michael Cherny with Bank of America. Your line is open.

This is Dan Clark on behalf of Mike. Just wanted to get a sense— we’ve seen a lot of color from other folks starting to season around any increase in utilization across healthcare. Is there anywhere that you can parse out if you saw a benefit from utilization in the quarter? Would you say your core products exist outside of that? Thanks.

Yes, what we've seen is across a multitude of different environments, user demand for our products continues to increase. Our conviction is agnostic to the broader environment, just given how early we are in the lifecycle; users continue to value our product. Our belief is that it's really about executing across the strategic pillars we talk about—building a trusted brand, continuing to enable technology, and allowing access from providers and users to thrive with that technology offering personalized products and clinical excellence. Our belief is that the execution across those elements is driving the strong growth in users as well as the revenue that we've seen on the platform thus far.

Got it. Thanks. And then just on taking up the 2023 guidance, sort of the change and meaningful change in trajectory, how should we think about the 2025 targets just with the new '23 guide here? Thanks.

Yes, great question, Dan. I think at this time, we set the 2025 targets as long-term targets. We were explicit for both the revenue target and the EBITDA target. The way to think about that is more of a floor versus a ceiling. With continued quarters like we've seen in Q1, our conviction that we have in exceeding those targets increases if we continue to see the performance that we've seen thus far.

Your next question comes from the line of Glen Santangelo with Jefferies. Your line is open.

I think there's going to be a lot of focus on the margin that you reported and guided for. If you look at your revised fiscal '23 guidance, you raised the midpoint of revenues by $75 million, but yet you raised the EBITDA range at the midpoint by only $2.5 million, right? So I think people are going to question, where's the incremental leverage? And I think you sort of touched on it a little bit, talking about incremental operating expenses in the quarters for marketing, improving customer experience. What I'm really trying to get a better sense of is for the remaining three quarters of the year, how should we think about the cadence of gross margins throughout the year versus incremental operating expenses that may be one time or sort of built into the base now to try to sustain the current level of revenue growth? Sort of any commentary around that would be helpful?

Yes, great question, Glen. At this time, we do want to maintain flexibility. We're pretty early on in the year, and we just see an immense amount of opportunity ahead for us. Our focus right now is primarily on scaling the business, both in terms of incremental users on the platform and the scope of offerings. We see many different opportunities where we have room to deploy capital, abiding by our capital allocation framework—whether that's in consumer experience, marketing, or promoting some of the pipeline of our newer products. There's a lot of areas we will actively explore throughout the year. That said, one of the reasons we've provided longer-term targets through 2025 is that it provides clarity for where the platform is going. While we'll make investments throughout 2023, the confidence in our ability to meet or exceed the $100 million EBITDA target in 2025 remains unchanged.

Okay, perfect. And maybe if I could just ask one follow-up on. You added mental health here more recently and I think the Company's goal is to add one to two therapeutic categories a year. We've probably got a disproportionate amount of questions on sort of weight management. I think in your prepared remarks, Andrew mentioned that you added experts in the medical board and weight management, menopause, and cardiometabolic health. Is that sort of like a precursor to ultimately moving into those categories? Obviously, weight management is the one that people are focused on, but given the high price of those drugs, it doesn't seem consistent with sort of your cash pay model, so I was wondering if you could just provide some clarity around those comments that would be helpful? Thanks.

Yes, sure. There are several categories we view as exciting, whether that's expanding the offering across men's health or women's health. Weight management as a category carries many of the characteristics of the conditions on our platform; it's chronic in nature and resonates emotionally with users. We eventually see ourselves entering that category. Again, it's still early innings, and we are going to do so in a very disciplined and thoughtful way that adheres to the standards of our platform. Recruiting experts will enable us to at some point enter that category effectively, and we will continue to update you as we get more clarity there.

Your next question is from the line of Korinne Wolfmeyer with Piper Sandler. Your line is open.

Good afternoon and thanks for taking the question. Yemi, first, I'd like to just touch on, as we think about the outlook for the top line for the rest of the year. Can you just kind of expand on the different drivers behind that? How much should we expect that growth to come from that subscriber base versus the monthly revenue per subscriber that seems to be increasing pretty nicely? As we think about the cadence of just sequential growth of subscribers throughout the year, can you just touch on how we should be thinking about cadence, and if we should expect some sort of deceleration in sequential growth as we progress? Thank you.

Yes. So I think on the first element of the equation, we started the year off very strong. As a result of the momentum we see in Q1, given that the vast majority, over 90% of the revenues are recurring in nature, that will naturally cascade into subsequent quarters throughout the year. Some of the momentum we are going to have stems from the strong foundation we built in Q1. As we also look at some of the dynamics we have seen across many categories where we are already present with respect to proprietary products, we have seen an uptick in overall user adoption. With some of the new offerings coming across the categories we talked about earlier, we are confident that we can continue subscriber growth throughout the year. This gave us the conviction to elevate the guidance expectations. With respect to subscribers, we don't explicitly guide to that number, but the primary driver of revenue growth will be primarily on subscriber growth.

Very helpful. Thank you. And then if I could just touch on the gross margin. I know we touched on this a little bit earlier, but I'd like to dive a bit deeper. You have been talking about adding more innovation on the products and as you do that, that could pressure gross margin a little bit heading into the kind of mid-70s range. Could you just touch on when we should start seeing a heavier impact from that? I mean, 80% this quarter is really good. Are we going to start to see pressure later in the year or is that really going to be a '24 '25 event? Thank you.

I think what you can expect to see is the same dynamic that we had throughout last year, where there were a whole host of factors that pressured gross margins. As operations got more efficient, we maintained gross margins, but year-over-year gross margins have expanded by 6 points. We see significant opportunity in our operations to continue to improve efficiency. From time to time, the margins will probably fluctuate; it's not going to be just a straight line down to 75%. It will take us time to proactively identify which opportunities are most necessary for the platform, and this will not happen in a quarter or two. I think it will take place over several quarters. Moreover, the framework that we use as we think about our long-term targets is that we do want to pass value back to our consumers in a way that's thoughtful and accretive to the platform. While doing that effectively will take some time, we will start to see margins come down as we identify those opportunities.

Your next question is from Luismario Higuera with Citi. Your line is open.

This is Luis for Daniel Grosslight. I just wanted to ask, what levers have been pulled to drive additional engagement among your current more tenured subscribers?

I'm sorry, Luis. I don't think I caught the question. You cut off for a minute for me.

Yes, sorry about that. My question is: what levers are you going to pull to drive additional engagement among your current more tenured subscribers?

At this point in time, the current focus is really around how do we bring more subscribers to the platform? Over time, you can expect that as we start to enable more offerings that are more personalized in nature across the platform. We've seen many subscribers organically start to adopt new offerings as they get more tenured. There are creative things we can do, like bundling offerings or identifying other ways to pair certain offerings, but we probably have a ways to go before executing those types of dynamics. The current focus is primarily on driving additional subscribers to the platform and enabling a broader base of choices. As we do that, naturally, up-sell opportunities will start to emerge.

Your next question comes from the line of Jailendra Singh with Truist Securities. Your line is open.

This is Jenny on for Jailendra. I wanted to follow up on your weight management category. What will make you change a company's approach considering some of your competitors have been more aggressive there? Can you help us understand how the economics would work considering there are all these new brand of drugs? Is it all about getting more consumers and subscribers on the platform and color on that?

Yes, I think that the elements that would make us actively go into the category would be number one; as we have the advisors, we're looking for ways to do this in a way that's safe and effective, also adding value to the overall category. We don't want to be a me-too just because the competitive set is offering it; we want to bring the distinct capabilities of the Hims & Hers platform to enable something that's differentiated. At this point, it's a little too early to speak around how the economics specifically would work; it's something we're researching and doing due diligence on, but there are many ways to execute this. We feel we have the time to ensure that when we do launch, it lands with consumers and adheres to our strategy and framework. We view this as a potentially more successful path over a longer duration.

Your next question comes from the line of George Hill with Deutsche Bank. Your line is open.

Hi, it's Maxi on for George. Thanks for taking the question. Can you give us an update on your conversation with payers? Are you still planning to incorporate insurance reimbursement into your system and what's the timeline for it? Thank you.

Yes, thanks, Maxi for the question. I think that payers and insurance are something we need to continue to explore. It goes alongside all of the different avenues we could invest in. At this point, we've opted to pursue other investment avenues, whether that's in the form of branded campaigns, exploration of categories, or offering personalized products. We'll continue to assess this quarterly, but there's no specific timeline yet. It really depends on how the business case stacks up relative to other opportunities we feel we have in the coming quarters to invest in.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.