Is Figs Stock Overvalued Now? What Security Benefit's Exit Signals About Healthcare Apparel Plays

When institutional investors exit positions, it often tells a story worth listening to. Security Benefit Life Insurance Co. recently walked away from its entire stake in Figs Inc. (NYSE:FIGS), offloading all 565,560 shares held during the third quarter. The liquidation represents approximately $3.19 million in position reduction—a meaningful 1.3% shift in the firm’s 13F reportable assets under management.

The Exit Strategy and Timing

Security Benefit’s complete exit came just two quarters after establishing the position around $4.60 per share. The firm sold its holdings at roughly $6, capturing a modest profit. What makes this decision particularly intriguing is the subsequent price action: Figs has since climbed to $9.59 as of November 24, 2025, posting a 103% annual return that significantly outpaces the S&P 500 by 87 percentage points.

Before the exit, this position represented 1.51% of Security Benefit’s total assets under management. The fund’s current top holdings now concentrate on Accelerant Holdings (32.3% of AUM at $81 million), followed by various Eldridge CLO ETFs and other diversified assets. By choosing to exit Figs entirely, Security Benefit prioritized capital redeployment over staying exposed to this healthcare apparel specialist.

Understanding Figs: The Business Model

Figs operates in the direct-to-consumer healthcare apparel segment, targeting medical professionals with premium-priced scrubs, lab coats, outerwear, and activewear. The company’s digital-first platform generates revenue primarily through proprietary online sales. What differentiates this business model is the recurring nature of its customer base—healthcare workers continuously replace worn apparel, creating built-in repeat purchase cycles.

The company specializes in different types of figs-inspired designs and premium healthcare clothing solutions, leveraging a vertically integrated approach that controls production through distribution. This efficiency enables stronger customer engagement and margin expansion opportunities.

Financial Performance and Growth Trajectory

Figs reported TTM revenue of $581.03 million with net income of $17.63 million, translating to a current net income margin of approximately 6%. Recent quarter results showed an 8% sales growth—notably the highest in two years, yet still modest for an emerging public company.

The valuation question becomes central here: even if Figs achieves a 15% net margin comparable to quasi-peer Lululemon (NASDAQ:LULU), the stock would trade at roughly 20 times earnings—reasonable but not aggressively cheap for the apparel sector. With current profitability at just 6%, Figs faces substantial operational leverage needed to justify sustained premium valuations.

The International Growth Wild Card

Perhaps the most overlooked element of Figs’ growth story lies in international expansion. Currently, international markets generate merely 14% of total sales, with the company holding less than 1% market share in these regions. If Figs successfully maintains double-digit growth rates internationally while expanding its presence in healthcare markets outside the U.S., the company could materially grow into its existing valuation multiple.

This untapped geographic opportunity represents genuine upside potential that current pricing may not fully reflect. Healthcare professionals worldwide require the same premium apparel solutions, yet Figs remains heavily concentrated domestically.

The Investment Takeaway

Figs presents an genuinely compelling business model—a company solving real problems for healthcare professionals with products featuring strong brand loyalty and repeat purchase dynamics. The concept is sound, the execution has been competent, but the stock valuation remains uncertain territory.

Security Benefit’s decision to harvest early gains suggests that despite the business’s merits, current pricing doesn’t offer compelling risk-reward for institutional capital. Yet the subsequent 50% rally from the exit price hints that growth acceleration and international potential may be underappreciated by the broader market.

For investors, the question isn’t whether Figs is a good company—it clearly is—but whether today’s stock price adequately compensates for execution risk and margin expansion challenges ahead. The answer likely depends on your conviction regarding international scaling and the company’s ability to double its net margin profile over the coming years.