Hims & Hers Health (HIMS +6.78%) is one of the fastest-growing stocks in the healthcare industry. While it has started out by focusing on niches and helping people with sensitive issues such as erectile dysfunction, it is branching out into larger areas, which can lead to much more growth in the future.
The company recently released its quarterly results and yet again demonstrated impressive numbers. And not only that, but Hims & Hers also raised its forecast. Is now the time to buy the stock before it takes off?
NYSE: HIMS
Key Data Points
Hims & Hers has been a growth beast
Hims & Hers isn't a terribly large healthcare company; its market cap is around $1.6 billion. But this is an intriguing stock for investors because of its impressive growth. It reported its third-quarter numbers earlier this month, and sales of $226.7 million were up 57% year over year. And that's actually lower than the growth rates it has posted in other recent quarters.
Data source: YCharts
Revenue in the latest quarter was more than the $148.8 million in sales that Hims & Hers posted for all of 2020.
The company has boosted its forecast for its top and bottom lines
In light of its strong results this year, the company also announced that it would be increasing its forecast. Here's a quick comparison of its full-year outlook for both revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), compared with the estimates it posted a quarter earlier:
| Metric | New Forecast | Prior Forecast |
|---|---|---|
| 2023 Revenue | $868 million to $873 million | $830 million to $850 million |
| 2023 Adjusted EBITDA | $43 million to $46 million |
$35 million to $40 million |
Data source: Hims & Hers Health.
The company isn't profitable yet and it reported a net a loss of $7.6 million this past quarter, but that was also a big improvement from the $18.8 million loss it reported in the same period last year.
More opportunities ahead for Hims & Hers
What is attractive about Hims & Hers is that it focuses on personalized care. People sign up for a subscription to receive prescription medication every month. And that results in recurring revenue for the healthcare company. By increasing its subscriber numbers, it has a larger base of customers to tap into and potentially upsell to. Last quarter, it reported 1.4 million subscribers, up 56% year over year.
Hims & Hers announced earlier this year that it would be entering new categories, including weight management and cardiovascular health. That can open up significantly more potential for the business in the long run, especially as the company looks to simplify the process for customers. For example, Hims & Hers says its providers can offer personalized treatment plans that will be able to treat multiple issues for patients with just one pill.
In the long run, the company is also looking at pain management, fertility, and diabetes as further growth opportunities.
Should you invest in Hims & Hers stock?
According to the average analyst price target, Hims & Hers stock can rise by more than 75% from where it is today. Price targets, however, normally look at how the stock might do over the next 12 months. If you're willing to buy and hold Hims & Hers stock for the long haul, there could be even bigger gains ahead.
As long as the company continues growing and improving its bottom line, there's little doubt that the business can become more valuable and generate strong returns for investors. It has many opportunities to pursue and build on its rising subscriber count, which should make Hims & Hers an appealing option for growth investors.
The company has reported some impressive results of late and although its operations aren't profitable just yet, it does look to be on a promising path. This has the potential to be a great stock to hang on to for many years.
