Figs Inc., a direct-to-consumer healthcare apparel and lifestyle brand that sells items like medical scrubs, face masks and shields, has filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC).
The number of shares to be offered and the price range for the offering have not yet been determined. Figs has set a target to raise up to $100 million, though many companies commonly use that figure as a placeholder before pricing their shares.
The brand has applied to list its stock on the New York Stock Exchange under the ticker symbol “FIGS.”
The company was built on the belief that no other apparel seller was sufficiently focused on healthcare professionals, making it an imperative for the brand to bring product to market that combine comfort, durability, function and style, all at an affordable price.
Going forward, Figs sees a major opportunity as a public company, citing Bureau of Labor Statistics data saying that employment in the U.S. healthcare industry will grow by 15 percent by 2029.
In the filing, the company highlighted that the total addressable market of the healthcare apparel industry was an estimated $12 billion in the U.S. and $79 billion globally in 2020, according to an April 2021 Frost & Sullivan study that the brand commissioned.
“Unlike most other categories in the apparel sector, the healthcare apparel industry is largely non-discretionary, recession resistant and much less susceptible to fashion or fad risk,” the brand said in the filing. “Over time, healthcare apparel purchasing has shifted from institutions to the individual, with approximately 85 percent of all medical professionals now purchasing their own uniforms. Due to frequent wear, healthcare apparel continuously needs to be replenished, resulting in highly predictable, recurring demand for such products.”
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Figs’ scrubs are manufactured with a proprietary fabric called FIONx, which features Silvadur antimicrobial technology that offers four-way stretch, anti-odor, anti-wrinkle and moisture-wicking properties. Scrubs are developed to feature easily accessible zippered pockets for professional and personal items such as stethoscopes, scissors, smartphones and ID badges.
Presently, Figs’ offering includes 13 core scrubwear styles, which represented approximately 82 percent of the company’s net revenues in 2020. The brand offers seven top sizes for women (XXS-2XL), six tops sizes for men (XS-2XL), and three lengths for women (petite, regular, tall) and three lengths for men (short, regular, tall), as well as various maternity offerings.
Figs also sells lifestyle apparel and other non-scrub offerings. Merchandise includes lab coats, underscrubs, outerwear, activewear, loungewear, compression socks, footwear, masks, face shields and other products.
Heather Hasson and Trina Spear teamed to co-found Figs in 2013, but the brand took off in 2020 amid the Covid-19 pandemic. The crisis led to full hospitals and overextended healthcare professionals, many of whom worked overtime and likely needed more comfortable personal protective equipment (PPE).
In 2020, Figs expanded its active customers by 118 percent from 600,000 to approximately 1.3 million, and increased net revenues to $263.1 million, representing 138 percent year-over-year growth from $110.5 million in 2019. In the first three months of 2021, Figs generated $87.1 million in sales, up 173 percent year over year. The brand also noted 60 percent of active customers are repeat customers.
Concurrently, the company also swung to profitability, going from a loss of $300,000 in 2019 to a profit of $57.9 million in 2020. Adjusted EBITDA at Figs shot up to $69.1 million from $1.7 million, while free cash flow jumped to $19.5 million from $1.8 million in 2019.
Figs piloted international expansion into Australia, Canada and the U.K. in 2020, and has plans to enter further new markets. The Frost & Sullivan study said the total addressable market for healthcare apparel outside the U.S. is expected to grow from an estimated $67 billion in 2020 to an estimated $86 billion in 2025.
According to the filing, Figs chooses not to enter into long-term contracts with any of its third-party suppliers or manufacturers for the production and supply of raw materials and products, and typically does business on an order-by-order basis.
Figs currently sources the vast majority of the fabrics used in its products from two third-party suppliers in China, and sources the other raw materials, including items such as content labels, elastics, buttons, clasps and drawcords, from suppliers located predominantly in the Asia Pacific region.
The brand works with a limited number of manufacturing partners that produce in facilities located in Southeast Asia, China and South America, with the vast majority of products currently being produced by its two largest manufacturing suppliers in Southeast Asia.
However, the company says it is continuously working to diversify sourcing and manufacturing capabilities.
The DTC business directly and actively manages all steps of the product development and production process, and distributes products from a fulfillment center located in City of Industry, Calif., where Figs has created a “warehouse-within-a-warehouse” model at its third-party logistics provider’s site.
Within the 166,700-square-foot facility is Figs’ 6,000-square-foot technology-enabled embroidery workshop, where the company offers text and logo embroidery on scrub tops, lab coats and outerwear. The embroidery workshop is fully staffed by Figs embroidery team members who complete the application and quality control of the product.
Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and BofA Securities are the joint bookrunners on the IPO.