Hims & Hers under pressure as Amazon launches rival service

Shares of Hims & Hers (HIMS) are sliding on Thursday after Amazon (AMZN) announced the launch of its Amazon One Medical Pay-per-visit telehealth service, which Citi believes is “very similar” to the former’s core offering in catering to cash pay patients who value convenient care and price transparency. The e-commerce giant said Prime members can now “quickly and easily” treat health, beauty, and lifestyle conditions for as low as $16/month for men’s hair loss, $10/month for anti-aging skin care, and $19/month for ED.

AMAZON ONE MEDICAL PAY-PER-VISIT: Amazon has introduced its Amazon One Medical Pay-per-visit telehealth service, saying that Prime members can now “quickly and easily” treat health, beauty, and lifestyle conditions for as low as $16/month for men’s hair loss, $10/month for anti-aging skin care, and $19/month for ED. Amazon One Medical Pay-per-visit telehealth service offers customers convenient, high-quality health care for 30+ common conditions — such as pink eye, the flu, or a sinus infection — with on-demand messaging visits for $29 and video visits for $49 payable by credit card or using a Flexible Spending Account or Health Savings Account card. Following the visit, the clinician sends the customer a personalized treatment plan and prescription, which customers can fulfill at the pharmacy of their choice.

Amazon is introducing low, clear upfront pricing for a clinical visit, treatment plan, and fast, free medication delivery for Prime members for a range of common health, beauty, and lifestyle concerns, including anti-aging skin care treatment, men’s hair loss, erectile dysfunction, eyelash growth, and motion sickness. Prime members can see the low total monthly cost or per use cost for the Amazon One Medical Pay-per-visit virtual visit as well as the medications from Amazon Pharmacy relating to their desired treatment, prior to beginning care. Once Prime members have their treatment plan, they can conveniently order their medication from Amazon Pharmacy in just a couple of clicks.

THREAT TO HIMS & HERS: After Amazon announced its launch of its Amazon One Medical Pay-per-visit telehealth service, which is “very similar” to Neutral-rated Hims & Hers’ core offering in catering to cash pay patients who value convenient care and price transparency, Citi noted that this is “not the first time” Amazon has launched a Hims-like service, pointing to the prior launch in November 2022 of Amazon Clinic. This is “the next iteration of Amazon Clinic” where, instead of using third-party telehealth vendors, Amazon is relying on Amazon-affiliated doctors and that the e-commerce giant is offering “much more compelling prices” than Hims on most treatments, the firm says, adding that it sees a threat to Hims’ core offering. Citi believes this makes Hims’ strategy to personalize treatment via compounding “ever-more important.”

The firm notes that unlike a Hims & Hers’ subscription which includes the cost of a provider visit in the price of the subscription, Amazon prices the provider consult separately. Therefore, the pricing differential between Hims’ offering and the Amazon offering depends on the length of the prescription and the number of consults required per year. That is, the longer the prescription and the fewer visits needed per year the more compelling the Amazon offering becomes.

PRICE ACTION: In Thursday trading, shares of Hims & Hers have dropped almost 14% to $23.70.