According to IBISWorld, there are 5,795,082 hospital employees in the United States. (1) Overall, Medium.com reports “there are 19 million healthcare workers in the US. That’s more than 10% of all US workers and a growing percentage of total employed workers.” (2)
Most of them wear scrubs to work. The same Medium.com article states, “The US scrubs market is 10+ billion dollars in sales and 50+ billion dollars worldwide.”
FIGS, Inc. (FIGS) Co-Founder and Chief Executive Officer (CEO) Catherine Spear certainly knew and understands the scrubs market. She and Heather Hasson realized that healthcare professionals wanted scrubs that met their personal needs and style versus the standard one size fits all options that were available.
The duo started FIGS in 2013 and went public on May 26, 2021, at $22 per share. (3)
Immediately after IPOing, CEO Spear headed straight for the sellers’ window, unloading more than $64 million in stock from September 2021 to December 2021. Shares of the apparel maker have gone lower and lower afterwards.
FIGS stock tumbled to its all-time low of $5.55 following its most recent quarterly results after management told Wall Street they expect growth to be slower than previous guidance because customers are cutting back on purchases due to economic uncertainty.
Chief Executive Officer Evans stepped in at $6.303 and bought 790,000 shares for nearly $5 million. (4) That’s a change of heart buy, as we call first time buyers, and we consider $5 million a sign of commitment.
According to the Bureau of Labor Statistics (BLS) in the United States, healthcare employment is projected to grow 15% from 2019 to 2029, which is much faster than the average for all occupations. This is expected to add about 2.4 million new healthcare jobs in the US alone.
Additionally, a report by the World Health Organization (WHO) estimates that the global healthcare workforce will need to grow by 40 million workers by 2030 to meet the growing demand for healthcare services due to several factors, including an aging population, an increase in chronic diseases, and advances in medical technology.
Here are some specific trends to keep in mind:
Aging population: As the baby boomer generation ages, the demand for healthcare services will increase. Older adults tend to have more health problems than younger people, which means they require more care.
Chronic disease: Chronic diseases like diabetes, heart disease, and cancer are becoming more common, and they require ongoing treatment and care. This means that there will be a greater demand for healthcare workers who specialize in managing chronic conditions.
Technological advances: Medical technology is advancing rapidly, and this is creating new opportunities for healthcare workers. For example, there is a growing need for healthcare workers who can manage electronic medical records and other digital health technologies.
Healthcare workforce shortages: Many parts of the world are already experiencing shortages of healthcare workers, and this trend is expected to continue in the future. There is a projected shortage of up to 139,000 physicians and 250,000 nurses by 2030, according to a report by the Association of American Medical Colleges.
Wall Street sees FIGS benefiting from the need for more healthcare workers with sales forecasted to hit $606.32 million in 2024 compared to expectations of $535.92 million this year. Earnings per share (EPS) are slated to be $0.08 in 2023, down from $0.16 last year, but rebound back to $0.16 next year.
As of right now, FIGS trades at 2.32 times sales (P/S) and 57 times the earnings (P/E). We’ll toss out the nosebleed P/E and focus on revenue to create a potential price target using 2024’s topline forecast. If the apparel company hits the street’s sales consensus and trades at 2.32 times sales, then the stock would price out at $8.83. The stock trades at $6.11 as we type with a one-year price target of $9.11. (5)
Overall: FIGS, Inc. (FIGS) appears to offer growth investors some upside potential. However, the recent downgrade in guidance, coupled with an uncertain economic environment could mean a bumpy road for investors. FIGS is only appropriate for investors with maximum risk tolerance and a time horizon through next year.
1 – https://www.ibisworld.com/industry-statistics/employment/hospitals-united-states/#:~:text=There%20are%205%2C795%2C082%20people%20employed,in%20the%20US%20in%202023%3F
2 – https://medium.com/@leadingtowin/figs-disrupting-the-10-billion-dollar-medical-scrubs-industry-ed1b76a9772a
3 – https://www.businesswire.com/news/home/20210526006179/en/FIGS-Announces-Pricing-of-Upsized-Initial-Public-Offering
4 – https://www.secform4.com/insider-trading/1820448.htm
5 – https://finance.yahoo.com/quote/FIGS?p=FIGS