It's Mark Mahaney at Evercore, ISI. I gave a commencement address this weekend. I mentioned AI, and I had to spend the next half hour shouting over it. So I lost my voice on a couple of plane rides. But I'm back. I could use HIMSS to get a little healthier. And I'm going to use HIMSS to get healthier. We're thrilled to have Yemi Okupe, who's the chief CFO of HIMSS and HERS. And we're going to go through a series of questions. I'll try to leave a little time at the end for Q&A. Yemi, thanks a ton for joining us today. And just before I get into, we'd published a bunch of questions as part of this conference prep, but just before I get into some of the questions, you want to just give us your view on what investors, what two or three things investors should focus on when it comes to HIMSS?

I think what I'd focus on is the fact that there is an amazing opportunity in front of us to transform the healthcare space. I think more and more consumers are just taking control of their own health. It's one of the things that's most important to the day-to-day lives, like how you look, how you feel, and show up to society. And so I think HIMSS and HERS is positioned with the closed-lip ecosystem to be a part of that transformation. Thus far, I think we've had a lot of success, but I think in terms of the opportunity in front of us with elements such as better leveraging our data, broadening the specialties that we have and now international expansion I think the sky is really the limit for the opportunities in front of us.

Okay and then I always like it when companies lay out these lofty goals or big goals or concrete goals I should say and you've done that for 2030 just talk through what those goals are and then you know maybe we'll start and we'll come back to this a couple of times but but we'll start the process of asking how you get there.

Yeah sure so I think that last year we laid out uh very ambitious uh five-year targets that were uh really more of an output of the opportunity in front of us as opposed to an input and so those goals were to deliver at least 6.5 billion of revenue uh and 1.3 billion of adjusted ebitda by by 2030. when you look at the components you know that are you know in front of us and just how large of a tan you know health care is uh that's what gave us you know the conviction and so our ability to execute on uh the key growth levers that we know that we historically have outlined uh will be an instrumental part of meeting or exceeding those goals and so that what what are those uh those are um looking to expand internationally which we were pleased to welcome the eucalyptus team to the hems and hearse family uh this morning it's continuing to broaden the specialties that we can sort of consumers across as we you know deepen and broaden the specialties there's the ability to have more more and more of a holistic approach uh to helping our subscribers uh look and feel better on a daily basis um i think that you know with the advance of technology uh we're seeing uh the benefits that that provided in terms of removing friction to access to health care i think with the scale of data that we have the ability to further elevate the overall consumer experience and democratize concierge type care becomes more and more achievable over the next couple of next couple of years. Partnerships are an important element. We were very pleased to with the success of the Novo partnership that we recently launched and we'll look to continue to expand those as well. And then lastly just you know continuing to deepen the in the personalized care that we're able to bring to consumers. So I think if we're able to execute across those five levers, the 20, 30 targets that we have will be a derivative and more than achievable.

When you talk about them being ambitious goals, I think that's the adjective that you used. Which was more ambitious, the $6.5 billion in revenue or the $1.3 billion in EBITDA?

I think collectively, both are ambitious, but I think it's more of an output of executing across uh what is a very uh ambitious mission statement and so i think that that is you know to make the world feel great through the power of better health um the levers that we spoke around of being able to go global being able to uh elevate the consumer experience through empowering them and their providers with access to to more data uh setting up uh partnerships you know around around the world to deepen the experience and the breadth of choice that consumers consumers have. I think HIMSS and HEARS has always gone after very ambitious things, the ability to personalize medication, the ability to build our own EMR system from the ground up, the ability to structure data to better serve consumers across the healthcare ecosystem. So this is largely in line with how the company thinks and pushes to make the consumer experience healthcare better and better for consumers.

You mentioned the Novo Nordisk relationship. You just want to give us an update on that?

Yeah, we disclosed within the first few weeks of launch we added north of 100,000 subscribers to the platform with the addition of that partnership. What we do see is that when we're able to pair breadth of assortment with the overall deep experience and tools on the platform really a magical experience comes together for for our subscribers and so we're seeing very deep engagement where uh north of um 85 to 90 percent of people are downloading the the hymns or hers app uh that are coming to come to us for weight loss as well as the engagement with providers uh is is really really uh deep so i think the typical consumer is engaging with us five times within the first few weeks um of the uh of onboarding that's a level of care that's almost impossible to get uh for all but like the wealthiest segments of society in a brick and mortar setting today and so i think it truly is transforming the the access that consumers have to better and better care is this a template for other types of deals? Yeah, I think that we would look to continue to broaden the partnerships that we have across the platform. I think also with us being one of the few healthcare players that has global reach across numerous markets, now Australia, Canada, the UK, Germany, I think that that enables us to just have a different partnership, both with domestic players, but also for many of the players, whether it's large pharmaceutical companies or others, more often than not they have global ambitions and we're one of the few players out there that have the ability to meet that need.

Okay. You talked about international, so I don't know, you had one of these data points. International revenue grew nearly 10x in Q1, now you had some acquisitions I think that are in there, but still that kind of growth is unusual. Talk about not the sustainability of 10x growth, but the sustainability of robust growth for the next couple of years. And how is that? And to what extent that's organic versus acquisition?

Yeah, I think that there is an immense opportunity here domestically in front of us still, but also from a global perspective. Many of the themes that hold true in the U.S., while the regulatory landscape and nuance may change, change, the overall principle behind human beings fundamentally is consistent. And so consumers around the world want to feel healthier. Consumers around the world want to have an amazing experience, and they want to do so in a way that is efficient and is not encumbered by friction. And so as we look to expand globally, we took our time through launching the UK several years ago really learned uh what how to navigate the regulatory nuances of a different market how to navigate uh different consumer preferences and a regulatory landscape and with that uh from those learnings we were able to continue to scale more broadly and so when we look at the arc and the trajectory of the the us and how that scales i think with the platform that we've set up um from the acquisitions that we've already acquired uh the livewell zava and eucalyptus that gives a very robust foundation for continuing to elevate the consumer experience and ultimately establishing a leadership presence across many of these geographies. And so we're very excited by what's in store across the global opportunity in the years to come.

Eucalyptus just closed this morning? Yes. I must have missed that. And on time, ahead of time?

It was roughly in line with our with our expectations there was some uncertainty around the exact timing of the close but I think with the strong execution across both teams we were able to to close that in June.

And talk about the what sort of impact we should expect from that acquisition?

Yeah so Eucalyptus was just given the uncertainty around the exact timing for when the deal would close we did not include it in the guide we did disclose at the end of last year the The run rate revenue was roughly $450 million, and the business was growing after triple digits last year. And so we think that it's going to be a meaningful accelerant. But when we really look at what's most exciting, it's probably less of a direct financial opportunity. And really, it's the fact that you're bringing together two teams that are culturally very, very similar, two teams that share a very ambitious mission of fundamentally restructuring how consumers are able to access health care around the world. And so I think the combination of the HIMSS and HERS team as well as the Eucalyptus team truly is going to accelerate the way that we're able to reach consumers around the world. And so it's something that we're very excited about.

You talk about, are there synergies here, or is it more of an add-on business?

I think that there are synergies, not necessarily in the traditional sense, like where we're looking to combine two like for businesses and do a ton of cost-cutting. I think the synergies really are around, again, taking the teams that are culturally very similar and leveraging the different points for where we can learn from each other. So I think the Hems and Her's ability to scale multi-specialty and expand it to numerous specialties is something that many markets around the world can benefit from. And then the eucalyptus muscle of being able to go in and launch new markets, they've been avid players have been able to scale the branded medications, I think is something that Hems will benefit from. And so I think it's really putting together these two forces. I think that that's the real synergy is accelerates the breadth and the ability to bring a better experience to consumers around the world.

You're going through a little bit of an investment cycle this year. I think that's the right way to phrase it. So just talk about what are the biggest areas of investment this year and is it a one-year investment cycle? Is there a way to think about how long it should extend, whether it should extend into 27 or not?

Yeah, I think we are consistently investing. I think that our focus is less around how do we manage on a quarter to quarter basis, but fundamentally how do we make investments that pay off with long-term yields. And so maybe it's helpful just to kind of give an overview around how we fundamentally think around the capital investment priorities and then rewind that into how we think that this plays out. Historically, what we've seen is the team is really great at setting a foundation where efficiencies are able to come at scale. You kind of see this in 2022, 2023, where the business was able to switch to profitability very quickly and expand margins from negative margins to double-digit EBITDA margins as a result of these principles. And so I think right now we're entering a similar phase where we're leveraging some of those principles, but I would say that we are looking to first and foremost become the market leader across each of our specialties. How do we expand market share and serve more and more consumers, both domestically as well as in the international markets that we serve? I think one of the things that also enables us to be powerful is the fact that with positive free cash flow, we're able to control our own destiny. That is something that we also do want to retain. And so while we will continue to invest, to expand share, we'll do so in a way that's thoughtful and disciplined that still enables us to generate that positive free cash flow. From there, when we think around, okay, what does the investment cycle look like? I think our ability to establish a leadership position across each specialty, each market will be the priority. From there, we expect to then realize economies of scale. So if we take individual markets as an approach, ultimately, some markets will be heavier investment opportunities, and ultimately, over time, those will switch to become the future profit centers for the organization. When we look at where the investment is going, I think it's really across a few areas. The first being we'll continue to invest and scale our international operations. We expect those to run roughly collectively at breakeven in the near term, but over time for many of those markets to become the future profit generators for the organization. We've invested very heavily in our technology team and we expect that to continue to yield. So we've hired some of the best minds in AI, some of the most distinguished engineers that have enabled the overall platform to move much faster. So our ability to launch three specialties last year, menopause, labs, and low testosterone is a reflection of that. And so I would say that you can continue to invest, you can continue to expect us to invest in technology, continue to expect us to invest in scaling our international markets. And lastly, the combination of those two elevating the overall consumer experience, both domestically and internationally.

I want to ask you about AI, but first, so you made this comment about, you know, the goals to be the market leader in each of your specialties. Grid this out for us. Which specialties do you think now you're closest to being, or you are closest to being the market leader? and which specialties do you have the most work to do in order to be the market leader?

I would say across most of our specialties, we are very close to being the market leader from our vantage point. I would say that we're probably in the very early innings of certain specialties, such as weight loss, just as the consumer market continues to grow and expand. It's not something that we can sit and rest our laurels around. And I think that where the power really comes into play is the ability to combine the breadth of specialties that we offer that few other players do to truly become this closed loop platform that elevates the overall experience for consumers. And so what does that structurally mean? It means the ability for a consumer to maybe come to HIMSS for one condition, get insights into their health and discover treatments for elements that they may not even have known. And so using myself as a real example, as I have undergone lab testing and looked to optimize my own care, it became very apparent to me that the ecosystem is very fragmented. So you can go do a test from one provider to interpret what that actually means. The traditional healthcare ecosystem is usually not equipped for that for most players, as as opposed to being a partner of that experience, oftentimes providers are asking, well, why are you doing these tests? So that leaves consumers to either, if you're fortunate enough, go to concierge level doctors or leverage AI or do some combination of those two. Then if you structurally find what you're able to, or what is the appropriate treatment, you need to find a path to go get treated. Incidenters has the ability to remove all of those friction points over time and democratize that experience from the labs to obtaining the insights to having the provider network and solutions to to act upon those and so i think the real magic magic is our ability to bring those together in a consistent experience for consumers over time and i think then at that point it's as you have as you have a leadership position each of the specialties that gives you the right to do it and potentially discover new specialties for our subscriber base um to help them improve their overall health.

You mentioned AI a couple of times, so let's let's go to that. Just talk about the uses of AI to drive cost efficiencies, to improve, to boost product development, and to actually create new revenue opportunities.

Yeah, I would say I think there's a few buckets. I think AI definitely has the potential to elevate cost efficiencies, whether that's how we think around the expense of CX that can be manual or customer experience operations at times. We're already seeing an ability for AI to start to transform the experience, number one, get consumers access to answers faster, but at the same time do so in a way that is more and more cost efficient. I think what's even more exciting, though, is the way that AI can elevate the consumer experience. When consumers come to any healthcare provider, one of the first things that they want to know is, has the solution worked for someone like me? the breadth of data that we have across our platform increasingly can help consumers, you know, with those types of questions, as well as equip them with tools to improve their overall experience. So to give real examples, you know, of what exists today and like what that could be, with over 2.5 million patients on our platform, the wealth of data that we're getting from things like labs, what treatments have worked, what treatments have not worked, can enable us to help consumers get to the right treatments the right dosage levels that ultimately elevates retention that represents an opportunity for us but at the same time enables consumers to benefit we also you know see the opportunity for things like the recently launched lab ai companion that helps go through that experience and interpret the results as i mentioned uh and so over time i think i would expect more tooling for consumers to roll out we'll continue to like use ai to leverage cost efficiencies across the corporate organization as well as the consumer experience. But really the ability to elevate the consumer interaction with the platform I think is what's the most exciting and also is where the most financial benefit over the long term will be driven from higher revenue and ultimately higher markets.

Let's talk a little bit about, let me switch gears a little bit on capital allocation. So the setup here is that you've got, with $300 million in operating cash flow, $225 million in CapEx, so modestly positive on free cash flow. When you think about the uses of cash going forward between organic investments, M&A, and shareholder returns, what do you want the right balance to be? What do you want investors to think you're thinking about in terms of the right balance?

Yeah, I think first and foremost, the, you know, the priority is always going to be around, you know, durable growth. And so I think that we have continued to grow the platform in a way that is, you know, both sustainable and durable. And so continuing to invest across the levers, both organically, you know, as well as through M&A and things such as international, the technology experience that consumers receive on our platform, as well as partnerships and setting up those, you know, that ecosystem will be something that's critical for us on a go forward basis. We've been highly acquisitive over the course of the last 12 to 18 months. and so a lot of the focus right now from an M&A perspective is around integrating those acquisitions in the ecosystem to truly be a success we'll put investment around that to ensure that each of those is is successful but the first priority will be will be growth we still have left ourselves the the flexibility through our buyback program to return capital to shareholders where that when there is a disconnect between the market value and the intrinsic value of the of our stock. But for the time being, when we when we look at the opportunity in front of us, the potential for growth is truly immense and something that we want to lean into and ensure that we are able to benefit from that.

I'm sorry, on the third one in the returns to shareholders, That's the – how did you want to weigh that versus the other two?

Yeah, so in terms of the priorities that we laid out, those are going to be the priorities. We will return value to shareholders. But right now, the ROI on many of the investments that we're making, we feel will be quite high.

And I may see if there's questions in the audience in Georgia. I may call on you. You know the asset very well. When you talked about M&A, yeah, you have done a lot of M&A recently. Does that make you – how should we think about your M&A plans over the next 12 to 24 months? You're in consolidation now, so you should be limited M&A, or is you're going to be just as opportunistic now as you were the last 12 to 24 months?

Yeah, I think we hold a very high bar for M&A. I think what's less exciting for us is to acquire assets just for revenue purposes. Every M&A deal that we do serves a fundamental strategic purpose. I think that we would not, if an amazing strategic opportunity emerged, I don't know that we would not pursue it as a result of having done M&A, but we would look at it as the capacity across the organization to take on something new and what a strategic value that it serves. So I think we would still be open to M&A. That said, I think the focus is going to be how do we take each of the assets that we have and ensure that they're properly integrated to bring forward the full value. So eucalyptus, that is setting up the ability to scale internationally across each of the markets that we're currently present in. We're very excited by the EurBio acquisition and how that can ultimately make lab testing more accessible for the masses through removing the friction of going into a facility today and allowing consumers to test from their own home. CS BIOS sets a great foundation for us to go and explore and go into peptides as the regulatory landscape permits. And so really over the course of the next 12 to 24 months, the focus is on ensuring that those assets are productive in nature.

Let me ask you this last question. We put this in our report. Long-term strategy. So for investors who have followed HIMSS and HERS through a lot of different changes, this multi-specialty expansion, GLP-1 ramp, international M&A, AI build, what do you want investors to most take away from these about you and how you're managing the business between now in 2030?

Yeah, I think that the biggest takeaway is to be number one, the opportunity in front of us is immense, right? I think healthcare is something that is fundamentally one of the most important things to consumers around the world. And thus far in many markets has not necessarily been the greatest experience. And so I think that HIMSS has already removed a lot of friction historically, and has the ability to, you know, continue to remove greater and greater friction for consumers around the world. I think the second thing is across our capabilities, truly believe that we are one of the few players that has the scale, has the technology, has the talent to transform that experience through many of the things that we talked about. The global scale that provides the ability to deepen partnerships around the world. the data that's structured across the platform to equip AI models to elevate the consumer experience and help providers better pair consumers with treatments. And so I think our ability to maintain those advantages is what gives us the ability to help reshape the healthcare or health and wellness space that ultimately enables a line of sight to the 2030 targets. Okay.

And you'll need to kind of rephrase that question.

Yeah, sure. So the question was effectively around how do we balance monetization of the existing specialties with the nascent specialties with new specialties. I think what we are seeing, so when we answer the first part of the question, which is how the new specialties are doing, I think they're tracking in line with our expectations. So we see a lot of success from specialties like low testosterone, you know, as well as labs. I think how we think around balancing core or the existing tenured specialties with the new specialties, I think the two are actually fairly correlated, right? And so our ability to, the way we think around it is less around, launch this new specialty at the expense of another specialty. and it's really more around how do we broaden the way that we're able to serve consumers across the platform. And so I think what we've observed by that is as we broaden specialties, consumers are proactively deepening their engagement with us across the platform. As we also add more specialties, the data set that we're able to get around how do we treat consumers across more and more specialties also broadens as well. So I think from our vantage point, You know, we look to thoughtfully deploy capital across each area, but when we really think around what is a differentiated benefit for where hims and hers benefits from, it's really this concept around shaping a platform that enables consumers to come and benefit in numerous ways, whether that's the technology tools or coming in from one specialty and then being able to get treated for another, I think that the two actually have synergies with one another. The final component that I'll say is, I think that with labs and some of the other specialties that we have, that we've introduced, historically Hem's and Hers has focused on the things that you can see, right? Things like hair loss, weight loss, sexual health. Increasingly with the data that we have on the platform, as well as with the rollout of labs, we are moving into a world of where you're able to help consumers prevent and optimize their health. So for things like low testosterone, you can't look and say, I have low testosterone. The ability to remove the friction of needing to go into a facility multiple times a year to do testing and enable consumers to test from their own home, identify if they have low testosterone. As an example, how we remove the friction from the consumers in an existing specialty. And so I think that the two are actually correlated with one another. We view it more as build a platform that has multiple touch points with the consumers. And ultimately that's a differentiating force that enables hims and hers to win. Yeah, so the question was really around what is a competitive moat around hims and hers. I think any company that tells you that they have one single thing, it's not a moat. And And so I think that the, you know, the HIMSS and HERS has an ability to take something that's incredibly complex and make it look really easy. So when you think around, you know, the elements that we've, you know, that we've built, the infrastructure, the scale, but also gives us access to data to better treat consumers. That is a distinct advantage that HIMSS and HERS, you know, has that very few other players have. The ability to lay a global foundation that also extends, you know, the reach is something that no other player has out there. The provider network is also something that we fundamentally benefit from. I think one of the assets that's also underappreciated or two that are underappreciated is the brand that we've historically invested in that's drawn consumers to the platform. That is fundamentally key because when you step back, you're putting things on or in your body. Consumers want to know that it's safe, it's effective, and I think Hems & Horses has done a great job of establishing that trust with consumers. the final component is really just the data like where we built an ecosystem where fundamentally the platform gets better with each consumer that comes you know to the to the platform and each uh data set the consumers are providing uh to providers enables us to better you know to better treat them so i would say it's the combination of our ability to execute across several things the operational excellence to you know build the infrastructure uh we've historically we talked around the richness of the data set and the scale of the data set and the technology talent that we have to translate that into a elevated experience for for consumers the global reach now that we have across the platform and the brand when you look at what it takes to actually replicate all of those whether you're a large player or startup that is a lot to execute on that we've built over the the course of the last several years that i think will continue to be a a differentiating factor for us as an organization. Yeah, so I think the question was around the economics of the Nova Nordics partnership and then the Canadian concept. What does that effectively look like overseas in Canada as well? I think on a dollar basis, the economics for the previously compounded products in Nova Nordics are relatively similar. So there's two components uh when a user comes to the platform uh you know that they're paying for one is the the cost of the medication um and given the engagement the tools uh the ability to engage with provider uh there's also a membership fee on the weight loss products as well uh for roughly uh 149 dollars uh 149 dollars a month that uh membership fee is what enables consumers to access the the provider It's what enables consumers to access all of the tooling that we have across the ecosystem. We're seeing a lot of success with the pairing of those elements that results in an economic profile similar to what we previously distributed before. With respect to Canada, we've always seen some consumers on the platform still prefer branded products. We've sold both branded and generic sexual health products and products across other specialties as well. And really what we've found is giving consumers a breadth of options is fundamentally what results in success. And so Canada, we're pleased to offer generics. We also offer that alongside the branded medications as well. and that enables consumers to work with their provider to identify what's the right treatment for their preference and we've seen a lot of success with that so far.

Okay, Yemi Okupe, Chief Financial CFO of Hims & Hers, thank you very much. Thanks Mark.