Hims & Hers Reports Q1 Growth, Faces Revenue Concerns for Q2
Hims & Hers Health (NYSE: HIMS), a telehealth platform, announced its Q1 financial results, showcasing notable year-over-year growth. The company reported adjusted earnings per share of $0.28 on revenue of $586 million. This marks a substantial rise from last year’s $0.10 EPS and $278 million in revenue. Additionally, the performance outpaced consensus estimates, which had forecast earnings of $0.23 per share and $538 million in revenue. The significant revenue growth was driven by a 38% increase in subscribers, totaling 2.4 million, alongside a 53% increase in Average Monthly Revenue Per Subscriber, now at $84.
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Q2 Outlook and Long-Term Projections
However, Hims & Hers’ Q2 revenue forecast, with a midpoint of $540 million, fell short of the consensus estimate of $565 million. Looking further ahead, the company has provided guidance for 2030, projecting sales of at least $6.5 billion and $1.3 billion in adjusted EBITDA. This represents a fourfold increase from 2024’s projected sales of $1.5 billion. Despite this ambitious outlook, investor confidence waned, causing the stock to decline over 4% in after-market trading due to concerns about short-term sales growth.
Stock Performance and Market Strategy
Despite this recent dip, Hims & Hers has garnered attention in recent weeks. The stock surged by 50% in the past month following the announcement of a partnership to sell Novo Nordisk’s obesity drug, Wegovy, on its platform. This collaboration signifies a strategic pivot for Hims & Hers, shifting from offering compounded versions of weight-loss medications to providing established branded pharmaceuticals. The company is also exploring further partnerships to enhance its service offerings.
Valuation and Investment Considerations
From a valuation perspective, HIMS currently trades at $40, resulting in a price-to-sales ratio of 5.5x, exceeding its five-year average of 3.3x. This premium is supported by strong business fundamentals, as Hims & Hers has recorded an average sales growth rate of 76% over the last three years, with current-year sales projected to grow by nearly 60% year-over-year. Previously, the stock reached over $70 when the focus was on compounded medications, but uncertainty surrounding long-term strategy after drug shortages raised investor concerns. The clearer strategic focus now involving obesity treatments and branded products may justify the higher valuation multiple. Long-term investors might find future dips in HIMS stock to be attractive entry points for potential long-term gains.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
