A Game-changing Innovator in Telehealth
Hims & Hers Health (NYSE:HIMS) is not just treading water; it’s causing a tsunami in the healthcare industry. In a vast and fast-growing telehealth market, HIMS is not merely another fish in the sea; it’s a shark. It offers telehealth services, consultations, prescriptions, and personalized wellness products, all wrapped in a neat, digital bow. The stock, currently trading 29% off its 52-week high, has posted a respectable 16% gain over the past year – just slightly behind the S&P 500’s 20% surge. At a market cap of ~$1.8 billion, HIMS is not a minnow; it’s a humpback, and it’s poised to leap beyond the competition due to its robust financial performance and solid market positioning.
We have faith in HIMS and believe it’s a smart buy, setting a price target of $14. That’s over a 50% upside from current share price levels, with ample growth potential in the long run.
An Enticing Total Addressable Market
No need for cold feet in this heated competition. While the telehealth market is crowded, it’s also sprawling. The sheer size and diversity of the market indicate that the competition isn’t a stumbling block for HIMS; it’s a diving board. As the digital health platform becomes increasingly important to consumers, opportunities within the market are multiplying. HIMS, along with its peers, is set to thrive by addressing varied needs within the healthcare and wellness space. The company operates in men’s health, women’s health, dermatology, and mental health sectors – all expanding runways. Furthermore, HIMS is eyeing new markets, including weight management, pain management, fertility, and diabetes, adding steam to its growth train.
In the U.S., the Health & Wellness market, valued at $1.2 trillion in 2022, is projected to grow at a compound annual growth rate of ~6% through 2026, reaching $1.5 trillion. HIMS’ total addressable market was $285 billion in 2021, estimated to swell to $381 billion by 2026. Importantly, HIMS’ current revenue accounts for a paltry 0.1% share of the U.S. market, projected to increase to only 0.4% by 2026. This confirms that the telehealth and wellness market is capacious enough to support the growth of numerous businesses concurrently.
Impressive Financial Performance
HIMS has been a paragon of financial strength despite the tempests of 2023. In the third quarter of 2023, the company’s revenue soared 57% year-on-year, hitting $227 million, with $12 million in adjusted EBITDA and an adjusted EBITDA margin of ~5%. This consistent outperformance has been a feather in HIMS’ cap, surpassing revenue estimates in eight consecutive quarters and outdoing EBITDA estimates in the past four. This track record underscores management’s acute understanding of the business and ability to manage investor expectations effectively, vital traits for a budding business.
From 2020-2022, HIMS achieved a striking total revenue CAGR of 88%. Although growth is anticipated to moderate, analysts still expect a CAGR of 36% from 2022-2026, with revenue hitting $1.3 billion. On the profitability front, HIMS aims to grow adjusted EBITDA by over 800% from 2022 levels, reaching $119 million by 2025 – a ~9% margin.
With its blend of growth and profitability prospects, coupled with an immense TAM, HIMS presents investors with a tantalizing opportunity as it continues to surge ahead in the telehealth industry.
