Hims & Hers Health, Inc.’s HIMS investors have been experiencing some short-term gains from the stock of late, which are much lower than the gains experienced till mid-February. The San Francisco, CA-based health and wellness platform’s stock has had a bumpy ride since then. It has gained 5.8% against the industry’s 2.1% decline in the same time frame, outperforming the sector and S&P 500’s 5.2% and 10.4% declines, respectively.
Two major developments of HIMS in recent months are the announcement of its promising fourth-quarter 2024 results and the acquisition of a U.S.-based peptide facility based in California (both in February). The buyout will likely enable it to strengthen the long-term durability of its domestic supply chain to meet the growing demand from Americans for personalized healthcare and treatment options.
On the earnings call, management confirmed that HIMS had closed the acquisition of a provider of at-home whole-body lab testing. Per management, the additional capability will likely enable it to test for a wide range of critical biomarkers across heart, hormone, liver, thyroid and prostate, thus aiding in proactively identifying individual risks for disease.
However, HIMS’ earnings per share missed the Zacks Consensus Estimate by a penny in the last reported quarter. The gross margin also contracted due to rising product costs, which did not look promising for the stock.
Hims & Hers is scheduled to release first-quarter 2025 results on May 5, 2025, after the closing bell.
HIMS Three Months Price Comparison
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Over the past three months, the stock’s performance has remained strong, outperforming its peers like Teladoc Health, Inc. TDOC. However, HIMS slightly lagged behind its other peer, Abbott Laboratories ABT. Teladoc’s shares have plunged 22.1%, while Abbott’s shares have gained 10.8% in the same time frame.
Despite several challenges within the health and wellness market, including workforce-related complications and health epidemics or pandemics, the favorable estimates indicate that the company might be able to maintain the positive market momentum at present.
HIMS expects revenues for the first quarter of 2025 and the full year in the bands of $520 million to $540 million (reflecting an uptick of 87-94% year over year) and $2.3 billion to $2.4 billion (representing growth of 56-63% from 2024 levels), respectively. The Zacks Consensus Estimate for revenues for the first quarter and the full year is currently pegged at $537.9 million and $2.33 billion, respectively while the same for earnings per share is currently pegged at 14 cents and 72 cents.
Hims & Hers has a unique mix of a clinically-focused electronic medical record system, digital prescriptions and cloud pharmacy fulfillment, each with multiple growth drivers promising robust growth potential.
HIMS’ Strong Fundamentals Aid it
Hims & Hers is consistently witnessing strong market acceptance of its range of curated prescription and non-prescription health and wellness products and services. The company has been focusing on providing access to high-quality, personalized solutions at an affordable price, which is significantly driving the number of net subscribers.
Hims & Hers believes that the growing emphasis on personalized solutions, along with the maturing of newer customer groups introduced to favorable pricing models, is enhancing its retention rates. Additionally, the company is witnessing continued success in acquiring customers through more cost-effective channels as awareness of the Hims & Hers brands grows.
On the fourth-quarter earnings call last month, management confirmed that monthly online average revenue per subscriber increased 38% year over year. Per management, the scaling of GLP-1s and subscribers shifting to more premium personalized offerings were the primary growth drivers. Management also believes that the significant investments made in the fourth quarter in specific areas will likely drive future economies of scale.
Hims & Hers’ Product Availability
Hims & Hers’ continued focus on strengthening its comprehensive weight loss offerings, such as announcing the doorstep delivery of daily meal replacement bars and shakes in November 2024, looks promising. The company aims to aid its customers in reaching and maintaining their health and wellness goals.
In September, HIMS announced access to the most common compounded GLP-1 subscriptions for $99 a month for eligible U.S. military, veterans, teachers, nurses and first responders. The company’s efforts to ease access to products are likely to aid it in expanding its customer base, which looks encouraging.
Challenges Ahead for HIMS
For the past few years, there has been a widespread shortage of semaglutide, a prescription-only drug. The shortage started widespread compounding of semaglutide in the United States, which became a popular way for patients to access weight loss drugs while branded products were in short supply. However, in February, the FDA announced that the shortage of semaglutide injection products is now resolved. This ended a nearly three-year shortage of prescription-only drugs. As compounding drugs that are essentially copies of a commercially available drug are federally restricted, this poses a challenge to Hims & Hers’ business, which has been benefiting from this shortage and compounding.
In the fourth quarter of 2024, Hims & Hers’ gross margin contracted 594 basis points due to a surge in the cost of revenues. This poses another challenge for the company if it is unable to control its costs in the future.
HIMS’ Stock Valuation
HIMS’ forward 12-month P/S of 2.7X is lower than the industry’s average of 4X but is higher than its five-year median of 2.5X.
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Teladoc and Abbott’s forward 12-month P/S currently stands at 0.5X and 4.8X, respectively, in the same time frame.
Hims & Hers’ Estimate Movement
Estimates for Hims & Hers’ 2025 earnings have moved 38.5% north to 72 cents in the past 60 days.
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Our Final Take
There is no denying that Hims & Hers is poised favorably in terms of core business strength, earnings prowess, robust financial footing and global opportunities. The Zacks Rank #2 (Buy) company’s strong growth prospects make it a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For those exploring to make new additions to their portfolios, the valuation indicates superior performance expectations compared with its industry peers. It is still valued lower than the industry, which suggests potential room for growth if it can align more closely with overall market performance. The favorable Zacks Style Score with a Growth Score of A suggests continued uptrend potential for HIMS.
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