Hims & Hers Health Faces Market Challenges but Shows Growth Potential
Hims & Hers Health (NYSE: HIMS), a telehealth platform, has experienced significant stock declines, with prices falling 60% from February peaks above $70 to currently below $30. Long-term investors may be familiar with this trend, as HIMS has seen steep drops previously—most notably an 87% decline during the inflation surge in 2022 and a 77% drop in 2020.
In response to shortages of popular weight loss drugs from Eli Lilly and Novo Nordisk, HIMS adapted by offering compounded substitutes. With these shortages easing, the company has now shifted its focus to selling branded weight loss medications via its telehealth platform, including Eli Lilly’s highly sought-after Zepbound. For those interested in reducing volatility compared to single stocks, exploring the High-Quality Portfolio, which has achieved returns exceeding 91% since its inception compared to the S&P 500.
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Key Financials Highlight Growth Potential:
- Average revenue growth of 76.2% over the past three years
- Revenue increased by 69.3% in the last year, from $872 million to $1.5 billion
- Thin operating margins at 4%, but adjusted EBITDA margins stand at 12%, with cash margins at 17%
- Minimal debt, with a debt-to-equity ratio below 1%
- $300 million cash reservoir with a 42% cash-to-assets ratio
Growth Prospects and Future Outlook
Looking ahead, Hims & Hers has some promising indicators. Subscriber numbers have nearly quadrupled from 0.5 million in 2021 to 2.2 million. Additionally, average revenue per subscriber has risen from $51 to $64 during this timeframe. The company has broadened its service offerings to support this growth and projects sales to reach approximately $2.35 billion in 2025, reflecting a remarkable 58% increase. Despite the recent stock volatility, analysts on Wall Street have an average price target of $45, indicating potential for a 50% uplift from current trading levels.
As history shows, market behavior can remain unpredictable for longer than investors might endure, especially amid fear. However, with HIMS’ robust fundamentals and growth path, patience could prove beneficial for long-term investors. Those seeking a conservative approach within a diversified portfolio might find the Trefis Reinforced Value (RV) Portfolio advantageous. This portfolio outperformed its all-cap stocks benchmark, providing a balanced diversification across large, mid, and small-cap stocks, thereby capitalizing on positive market conditions while mitigating losses during downturns, as evidenced by its performance metrics.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
