Hims & Hers Health (HIMS 1.62%) continues to be a volatile stock. The stock's value has been cut in half over the past year, but at one point this year, it had doubled off its lows. Following its Q1 earnings announcement on May 11, the stock was once again heading lower.
Let's take a closer look at the telehealth company's results and prospects to see if this dip is a buying opportunity.
Image source: The Motley Fool.
Hims is dealing with margin compression
While Hims management raised its revenue outlook for the year, it significantly lowered its adjusted EBITDA guidance. It now expects revenue to range from $2.8 billion to $3 billion, with adjusted EBITDA of between $275 million and $350 million. That compares to an earlier forecast of 2026 revenue between $2.7 billion and $2.9 billion, with adjusted EBITDA of between $300 million and $375 million.
The revised guidance stems from the company's pivot to branded weight-loss drugs, in particular Novo Nordisk's Wegovy. This is leading to increasing new subscriber additions and higher revenue, but at lower margins. However, the company thinks it can drive overall profitability growth and lessen the margin hit through cross-selling other products and gaining scale.
As for Q1, Hims sales edged up 4% year over year to $608.1 million. That was toward the low end of its $600 million to $625 million guidance. U.S revenue fell 8% to $529.9 million, while international revenue skyrocketed from $7.3 million a year ago to $78.2 million.
Monthly revenue per subscriber dropped by 6% year over year to $80 per month, while the number of subscribers grew 9% to more than 2.58 million.
Adjusted EBITDA sank 51% from $91.1 million to $44.3 million. Earnings per share (EPS) were a loss of $0.40, compared to a profit of $0.20 a year ago.
For Q2, Hims expects revenue of $680 million to $700 million and adjusted EBITDA of $35 million to $55 million.
NYSE: HIMS
Key Data Points
Should investors buy the dip?
Right now, it looks as if the Hims growth story is starting to fall apart. While revenue may climb, it's set to see significant margin compression. That's generally not the type of stock you want to own.
That said, I think peptides could reignite Hims' growth story. However, this is still a very new area with still-unanswered questions. In 2023, the government restricted 14 peptides over safety concerns. Nonetheless, they have been very popular on the gray market, and U.S. Health and Human Services Secretary Robert F. Kennedy Jr. has been pushing the FDA to lift its ban and approve them for use.
If investors want to make a wager on peptide approval, they can buy Hims stock on this dip, but I'd consider it a speculative bet at this point.
