Scrubs maker FIGS soars in healthy market debut
New York(CNN Business) Doctors and nurses aren't likely to be strutting down runways in Milan or New York in their scrubs. But if they did appear in fashion shows, they'd likely wear outfits designed by FIGS, the trendy health care apparel company that went public Thursday.
Shares of FIGS surged more than 35% from their initial public offering price of $22 in their market debut. At a price of around $30, the company was valued at nearly $6 billion.
In another sign of how strong demand was, FIGS priced its IPO above its expected range and sold more shares than planned.
FIGS is also making history as the first IPO that allowed Robinhood customers to get the stock at the IPO price as opposed to waiting to buy if after it began trading.
The company said in its registration filing with the Securities and Exchange Commission that about 1% of the 26.4 million shares sold in the offering were allocated to investors on Robinhood's online brokerage platform.
FIGS, unlike many other startups that have gone public in recent years, is also profitable. The company reported net income of $58 million in 2020 and earnings of $16 million in the first quarter of 2021 as its sales and customer base both more than doubled.
The company, which touts its scrubs as being more fashionable and comfortable than standard- issue medical apparel, also said in its SEC filing that is benefiting from the fact that "healthcare apparel purchasing has shifted from institutions to the individual, with approximately 85% of all medical professionals now purchasing their own uniforms."
FIGS also noted that "due to frequent wear, healthcare apparel continuously needs to be replenished, resulting in highly predictable, recurring demand for such products."
How FIGS got its start
The company, founded by co-CEOs Heather Hasson and Trina Spear, got its start in 2013.
After talking to medical professionals, Hasson said she realized there was demand for better-fitting scrubs that looked good and had better silhouettes instead of plain, boxy pale blue and pink uniforms.
Hasson and Spear told CNN Business they started selling apparel to doctors, nurses and nurse practitioners in Los Angeles in the parking lots of hospitals from their cars. Then they ramped up the business to make it a 24/7 online operation.
They're not overly concerned about possible competition from Amazon (AMZN) or other online apparel retailers, they said, mainly because the business is so specialized.
"It takes a long time to build a brand. You can't start a company like this overnight and have people suddenly believe in you," Hasson said.
FIGS also should continue to benefit from sales of masks and other protective gear to doctors and nurses, even as companies like Etsy (ETSY) have started to report weaker demand for masks now that people are getting vaccinated for Covid-19.
"Health care professionals wore masks well before the pandemic. Mask and face shields are part of the professional uniform," Hasson said.
FIGS is the latest unicorn to take advantage of the stock market's strength this year and go public, joining the likes of ZipRecruiter, Oatly, Jessica Alba's The Honest Company and Coinbase.
