Research: Disrupting Healthcare Monopolies: Hims & Hers vs Traditional Providers

Customer Lifetime Value (CLV): Engaging Patients Early for Higher Value

Direct-to-consumer healthcare firms like Hims & Hers capture patients earlier in their health journey, which dramatically increases customer lifetime value. By targeting people with emerging or even pre-disease conditions, they build long-term relationships and monetize health needs that traditional systems often overlook until they become severe. This early engagement strategy not only boosts CLV for the company but also diverts future revenue away from legacy providers (who typically earn more when illnesses progress).

• Early Engagement of Underserved Customers: Hims & Hers began by focusing on stigmatized or underserved issues – for example, young men’s hair loss and sexual health – that many traditional providers weren’t proactively addressing (From hair growth to weight loss, how Hims is turning the traditional healthcare industry on its head - TNGlobal). By offering convenient online care and privacy for these sensitive needs, Hims attracted a large base of younger customers and locked in their loyalty early (From hair growth to weight loss, how Hims is turning the traditional healthcare industry on its head - TNGlobal). Many of these patients might never have engaged with a hospital until much later in life (if at all), meaning Hims is capturing lifetime value that would have bypassed the traditional system. In fact, Hims’ subscriber base grew from about 554,000 at the end of 2021 to 1.5 million by the end of 2023 (The Healthcare Breakdown No. 043 - Breaking down Hims’ really big CAC), reflecting how many consumers are flocking to its early-engagement model. Each of these customers often starts with one issue but can remain with the platform for multiple needs over years. Hims reports an average monthly revenue of ~$67 per subscriber (Is Hims & Hers Health Stock a Buy? | Nasdaq), indicating that a typical customer uses the service repeatedly (through subscriptions or cross-selling of additional treatments). This recurring usage translates to hundreds of dollars per year in revenue per customer – and over a lifetime, potentially several thousands – far exceeding the value a traditional provider might capture from a sporadic urgent care visit or a delayed chronic disease intervention.

• Preventive Care and Higher CLV vs. Lost Hospital Revenue: Engaging patients earlier isn’t just about treating minor conditions – it also means preventing more serious (and expensive) health problems down the line. For example, Hims & Hers has rolled out a weight management program offering GLP-1 medications (like semaglutide) via telehealth. This targets patients who are overweight or pre-diabetic, helping them lose weight before developing full-blown diabetes or heart disease. From a CLV standpoint, Hims gains a long-term customer who might stay on therapy or other wellness services for years. But for traditional healthcare systems, this represents lost future revenue. If a pre-diabetic patient avoids progressing to diabetes, a hospital loses all the downstream business that comes with a diabetic patient (insulin prescriptions, endocrinology visits, treatments for complications like neuropathy, kidney dialysis, etc.). GLP-1 drugs have been shown to significantly improve health outcomes – they can reduce cardiovascular risks and even improve kidney function (GLP-1 and Its Impact: Unpacking the FDA’s Latest Move Against Hims & Hers Health) – which is fantastic for patients, but it means fewer costly procedures for providers. A report by the American Hospital Association noted that the surging use of GLP-1 weight-loss drugs is expected to “affect providers’ operations downstream” as widespread weight loss reduces incidences of chronic disease (3 Ways GLP-1 Drugs Could Impact Your Hospital’s Future | AHA). In other words, hospitals foresee fewer heart surgeries, dialysis sessions, and other interventions if obesity and diabetes rates decline. Consulting firm Kearney explicitly warned that GLP-1 medications’ ability to reduce the risk of various health conditions will result in reduced downstream provider expenditure (Fight for survival: how GLP-1s have created an existential threat to ...) – a polite way of saying hospitals will make less money treating those conditions. For instance, one study estimated that a 25% reduction in body weight can save about $2,849 per year in healthcare costs for an at-risk individual by averting future complications (Could Pricey GLP-1 Drugs Cut Healthcare Costs? The Math Isn’t Simple | tctmd.com). Over a decade, that’s nearly $30,000 less spent on treatments – a revenue loss that would have otherwise flowed to clinics, pharma, and hospitals. By capturing such patients early and keeping them healthier, Hims & Hers essentially trades away acute-care dollars from the traditional system in favor of steady, long-term revenue on its platform. This dynamic – monetize prevention rather than illness – underpins the higher CLV per customer for Hims and the financial threat it poses to incumbents.