Business Overview: FIGS, Inc. (NYSE: FIGS)

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Executive Summary

FIGS, Inc. is a founder-led, direct-to-consumer healthcare apparel and lifestyle brand, best known for reinventing the medical scrub as a premium, well-fitted product rather than a disposable hospital-issued garment. Its stated mission is "to celebrate, empower and serve those who serve others," and its customer base is overwhelmingly healthcare professionals — nurses, nurse practitioners, dental hygienists, surgeons, pharmacists, and EMTs — plus the students and young professionals entering those fields.

FIGS sells primarily through its own DTC digital platform (website and app), a B2B institutional channel called TEAMS, and five physical "Community Hub" retail stores. As of December 31, 2025, the company reported about 2.9 million active customers. It matters as a case study in applying consumer-brand playbooks (premium pricing, proprietary fabric technology, direct community engagement) to a previously commoditized, unbranded apparel category, though its growth has slowed sharply from its pandemic-era pace.

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1. Core Business Model & How They Work

FIGS designs apparel in-house, outsources manufacturing to third parties, and sells almost entirely direct, skipping the traditional wholesale scrub-supply chain.

[ In-House Design + Proprietary FIONx Fabric ] ➡️ [ Third-Party Manufacturing (Purchase-Order Basis) ] ➡️ [ Direct Sale via DTC Website/App, TEAMS (B2B), or Community Hub Stores ] ➡️ [ Community/Brand Engagement (Ambassadors, Threads for Threads) Drives Repeat Purchase ]

Key Operational Drivers

1. Direct-to-Consumer Focus: Primary sales occur through FIGS' own website and mobile app, capturing full retail margin rather than selling through hospital-supply wholesalers.
2. TEAMS (B2B Channel): Lets institutions — medical offices, hospital departments, concierge clinics — purchase uniforms for staff in bulk, diversifying beyond individual consumer purchases.
3. Proprietary Fabric Technology (FIONx): A four-way-stretch, anti-odor, anti-wrinkle, moisture-wicking fabric used across its flagship scrubwear, positioned as a functional differentiator versus generic scrubs.
4. Low Return Rates: FIGS reports an approximate 10% return rate from 2021 through 2025, versus the 30-40% typical of online apparel — a meaningful operating-cost advantage tied to fit consistency and brand trust.
5. Community Hub Retail: Five physical stores supplement the digital-first model, giving customers a place to try fit and reinforcing brand presence in key markets.

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2. Business Segments

FIGS operates as a single healthcare-apparel brand rather than multiple reportable segments; its internal breakdown is better described by product line and channel:

                          FIGS, Inc.
                               |
      -----------------------------------------------------
      |                   |                    |
  Scrubwear          Non-Scrubwear          Channels
  (core styles,       (base layers,          (DTC website/app,
  >60% of 2025         outer layers,          TEAMS B2B,
  net revenue)          loungewear,            5 Community Hub
                        footwear w/            retail stores)
                        New Balance)

• Scrubwear: 17 core styles in 10 core colors, available year-round; core styles made up over 60% of 2025 net revenue — the heart of the brand and the category FIGS originally disrupted.
• Non-Scrubwear: Base layers (underscrubs, compression socks, leggings), outer layers (lab coats, jackets, fleeces, and footwear co-designed with New Balance), and loungewear — adjacent categories meant to extend wallet share per customer beyond the core scrub purchase.
• Channels: The DTC digital platform is the primary channel; TEAMS serves institutional buyers; five Community Hub stores provide a small physical retail footprint.

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3. Key Offerings

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4. Competitive Landscape

• Wholesalers (incumbent scrub suppliers): Barco Uniforms, Landau Uniforms, and Superior Group of Companies — legacy, mostly wholesale-distributed scrub brands that FIGS displaced for the DTC-savvy segment of the market.
• Aggregated retailers: Scrubs & Beyond and Uniform Advantage — multi-brand retail outlets that sell scrubs from many manufacturers rather than a single proprietary brand.
• Direct restructuring threat: Careismatic Brands, historically the most direct full-scale competitor (wholesale-and-institutional focused), filed for a debt-driven bankruptcy restructuring in 2024; a restructured, leaner Careismatic could compete more aggressively on price going forward.
• DTC apparel brands: Jaanuu, Mandala, and Fabletics — other direct-to-consumer apparel brands competing for similar premium-athleisure-adjacent positioning.
• Broader entrants: FIGS explicitly expects competition from large, diversified apparel brands entering healthcare apparel, given the category's demonstrated premium-pricing potential.

                High Brand/Premium Positioning
                        |
    FIGS                |
    (DTC, proprietary    |
    fabric, community)   |
                        |
 -----------------------|------------------------ Narrow (Healthcare-Only) Focus
                        |                                      Broad Apparel Market
   Jaanuu, Mandala       |    Barco, Landau, Careismatic
   (DTC niche rivals)    |    (wholesale incumbents)
                        |
                Low Brand/Premium Positioning

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5. Strategic Strengths & Risks

Strengths

• Category-defining brand within a captive professional audience: FIGS built the first true consumer brand in a previously commoditized category, giving it premium pricing power that legacy wholesalers (Barco, Landau) never pursued.
• Debt-free balance sheet with meaningful cash reserves: Independent analysis cites roughly $250 million in cash and no debt, giving FIGS resilience to weather a growth slowdown without financial distress — a real differentiator versus a newly-restructured competitor like Careismatic.
• Structurally low return rates: A ~10% return rate versus the 30-40% online-apparel norm reflects genuine fit/trust advantages and directly improves unit economics versus DTC apparel peers generally.
• Repeat-purchase professional customer base: 2.9 million active customers in an occupation-based niche (healthcare workers who wear scrubs daily) creates a naturally recurring replacement-purchase cycle, distinct from discretionary fashion buying.

Risks

• Growth has stalled: Revenue growth slowed to low single digits and has been negative in some recent quarters, suggesting the pandemic-era surge in DTC scrub demand may be maturing or saturating.
• Compressed profitability: Net margins have narrowed to low single digits, reducing the operating leverage FIGS displayed during its hyper-growth phase.
• Thin structural moat beyond brand: Independent analysis flags that switching costs are low, network effects are modest, and regulatory barriers are minimal — competitors can replicate fabric technology and DTC distribution with enough investment.
• Restructured competitor threat: A post-bankruptcy Careismatic Brands, freed of its prior debt burden, could undercut FIGS on price in the wholesale/institutional channel.
• Unproven reacceleration levers: Future growth depends on international expansion, new categories (footwear, outerwear), and hospital team-buying programs (TEAMS) — none of which has yet demonstrably restored FIGS' earlier growth rate.

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6. Financial Overview

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7. Summary Conclusion

FIGS succeeded by doing something the legacy scrub-wholesale industry never bothered to do: building a real consumer brand, a proprietary fabric, and a direct community around an occupational uniform. That brand-plus-fit moat still supports above-industry gross margins and an unusually low return rate, and a debt-free balance sheet gives the company real staying power. The biggest forward risk is durability of growth rather than survival: with core scrubwear still over 60% of revenue, slowing topline growth, compressed net margins, and only low-barrier advantages (brand and product quality, not network effects or switching costs) protecting its position, FIGS' next chapter depends on whether international expansion, new product categories, and institutional TEAMS buying can reignite growth before a leaner, restructured Careismatic or a large diversified apparel entrant erodes its pricing power in the category it created.