A year ago, Heather Hasson and Catherine “Trina” Spear traveled from Santa Monica, Calif., to New York to ring the opening bell at the New York Stock Exchange. The co–chief executives of FIGS, an online retailer of higher-end apparel for healthcare professionals, cheered their initial public offering together with people who joined them on the bell podium wearing stylish scrubs.
FIGS had capitalized on some powerful pandemic-era trends, and, in the IPO, its shares were sold at $22 apiece, raising $580 million. The FIGS IPO even tapped the retail market, becoming the first IPO that was made available to users of the Robinhood trading app.
Most of the IPO money raised, however, didn’t go to the company. Instead, $450 million of the proceeds went to Tulco Holdings, a company controlled and run by Thomas Tull, the Hollywood movie-studio billionaire. Tull’s holding company had invested some $65 million in FIGS FIGS, -3.11% over the preceding four years and become its biggest shareholder, securities filings show.
“The healthcare apparel market is massive. It’s a $12 billion market in the United States. It’s $79 billion globally,” Spear said on the day of the IPO from the floor of the New York Stock Exchange. “We actually feel those numbers are a bit understated.”
With fashionable face masks and a direct-to-consumer online model that had become popular with investors, shares of FIGS quickly soared to $50. Four months after the IPO, in September 2021, FIGS announced a secondary offering at $40.25 per share.
This time Hasson, 40, and Spear, 38, got in on the action. Hasson sold $94 million in FIGS shares in the secondary offering, and Spear sold $59 million, securities filings show. Tull’s company also sold another chunk of FIGS shares in the secondary offering. In total, Tull’s company has sold $822 million of shares since the IPO, according to an analysis of securities filings conducted by research and analytics firm VerityData.
But this year investors have started to question the FIGS growth story and the general euphoria around new direct-to-consumer models. Wall Street analysts have become skeptical that the total addressable market for stylish scrubs is as large as Spear had asserted. Investment bank Cowen, for example, put out a note saying that the market is much more difficult to pin down and that employment growth among healthcare workers appears to be slowing.
Shares of FIGS have plummeted. The stock recently traded hands for $10.16, down 54% since its 2021 IPO and 75% since FIGS’s secondary offering. Anybody who bought and held the $975 million in shares sold by Tull’s company, Hasson and Spear is sitting on massive losses. The entire company was recently valued at $1.7 billion.
“After building the company and growing its value for over a decade, FIGS co-founders Heather Hasson and Trina Spear sold a small percentage of their overall holdings in the same timeframe and amounts that any FIGS shareholder was allowed to sell under the IPO’s lockup terms,” FIGS said in a statement. “While macro conditions later impacted the overall stock market, Heather and Trina continue to be more invested than anyone in FIGS’ long-term success as two of the company’s largest shareholders.”
Tull declined to comment.