Although the telemedicine company displayed blistering growth and issued robust guidance, shares of Hims & Hers (HIMS +10.86%) plummeted following its fourth-quarter earnings report. The stock had rocketed from around $24 at the start of the year to over $70 before pulling back.
Investors became excited about the prospects of the company, while its Super Bowl ad and the acquisition of an at-home lab facility helped propel the stock higher. However, the stock gave back a lot of gains after semaglutide, the active ingredient in GLP-1 weight loss drug Ozempic, was taken off the Food & Drug Administration's shortage list. Hims & Hers has been selling semaglutide-based GLP-1 compound drugs under an FDA exception since the drug was in shortage. The FDA gave compounders 90 days to stop selling these drugs or it would take action.
Let's take a closer look at Hims & Hers' most recent report and forecast, to determine whether the sell-off is a buying opportunity.
NYSE: HIMS
Key Data Points
Rapid growth
Hims & Hers once again delivered outstanding growth in Q4, with its revenue surging 95% to $481.1 million. That was well ahead of the revenue forecast of $465 million to $470 million it gave earlier. Net orders climbed 22% to 2.81 million, while average order value (AOV) jumped 63% to $168.
Subscriber numbers rose 45% year over year to 2.23 million. The company said that 55% of its subscribers now have at least one personalized subscription. It highlighted strength in dermatology, with male subscribers up 50% and female subscribers doubling.
Revenue excluding GLP-1 drugs climbed 43% to $1.2 billion in 2024, with GLP-1 drugs adding an additional $225 million in revenue for the year.
Hims & Hers ramped up its marketing spend in the quarter, but was able to show marketing leverage, with marketing expense as a percentage of revenue falling year over year. Marketing spending increased 76% year over year to $221 million, but was 46% as a percentage of revenue compared to 51% a year ago. Gross margin came in at 77%, but that was below the 78.4% analysts were expecting, according to StreetAccount.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soared to $54.1 million from $20.6 million a year ago. Adjusted earnings per share (EPS) came in at $0.11, just ahead of the $0.10 analyst consensus as compiled by LSEG.
Operating cash flow nearly quadrupled to $86.4 million from $22 million a year ago, with free cash flow up more than 450% to end at $59.5 million.
| Metric | Q4 Results | Growth (YOY) |
|---|---|---|
| Revenue | $481.1 million | 95% |
| Net Orders | 2.81 million | 22% |
| AOV | $168 | 63% |
| Subscribers | 2.23 million | 45% |
| Adjusted EBITDA | $54.1 million | 163% |
| Adjusted EPS | $0.11 | 1,000% |
| Operating cash flow | $86.4 | 293% |
| Free cash flow | $59.5 million | 452% |
Data source: Hims & Hers. YOY = year over year.
Looking ahead, Hims & Hers forecast 2025 revenue to come in between $2.3 billion and $2.4 billion, for growth of 56% to 63%. It projected adjusted EBITDA to range from $270 million to $320 million.
For the first quarter, Hims & Hers guided for revenue of between $520 million and $540 million, for growth of 87% to 94% from the $278.2 million it reported a year ago. It's looking for Q1 adjusted EBITDA of between $55 million and $65 million. It noted that it will see some pressure on gross margin in Q1, but expects it to improve throughout the year.
The company expects weight loss revenue to be $725 million for 2025, but said that this excludes semaglutide, which will not be offered on its platform after the first quarter. It's looking for growth to come from oral weight loss medications and the GLP-1 drug liraglutide, which recently went generic.
Image source: Getty Images.
Is Hims & Hers a buy on the dip?
Hims & Hers turned in a great quarter and issued upbeat guidance, but the stock tanked nonetheless. The stock had been on a big run, but some investor hopes were dashed when the company said it would no longer offer semaglutide-based weight loss drugs after Q1. In addition, gross margin fell a bit short of expectations, and that pressure is expected to last into Q1.
Excluding weight loss drugs, Hims & Hers still appears to be robustly growing its business. It said its revenue from oral weight loss drugs was at a run rate of over $100 million in 2024, for the seven months it was available. Excluding its GLP-1 business, total revenue increased 43% to $1.2 billion last year. That's impressive growth.
However, its prediction of $725 million in weight loss revenue, excluding semaglutide-based drugs, could be overly ambitious. That's a lot of growth in the weight loss category, and it will no longer be able to compound semaglutide. GLP-1 drugs contributed $225 million in 2024 revenue, but were introduced in Q2, while oral drugs were at a $100 million run rate.
Annualizing weight-loss revenue gets you to over 30% growth in the category in 2025 with the loss of semaglutide-based drugs. Hims & Hers will need to convince a lot of patients to switch prescriptions to achieve that growth.
Turning to valuation, the stock trades at a forward price-to-earnings (P/E) ratio of 37 times based on 2025 analyst estimates:
HIMS PE Ratio (Forward) data by YCharts.
For its projected growth, that isn't outrageous. However, questions will remain about its ambitious guidance for weight loss drug revenue -- at least until it reports its Q2 results, as that will be the first quarter without selling semaglutide-based drugs.
I personally moved to the sidelines well ahead of earnings (after originally buying the stock at under $7 per share), due to the hype and the risk to Hims & Hers' GLP-1 sales. While I think the business remains solid, the aggressive guidance will keep me sitting out for now.
