A Pulse on Hims & Hers: Boom in Sales, But Better Profits Elude
Hims & Hers shares surge due to Q1 sales increase by over 100%
Hims & Hers (HIMS) saw shares spike 8% on Tuesday, following the health and wellness platform's earnings report showing skyrocketing sales and subscribers, surpassing forecasts. Yet, the company fell short of analyst projections for current-quarter sales, due to shifts in weight-loss treatments and sexual health products.
In Q1, Hims & Hers wound up with an EPS of $0.20, revenue soaring 111% YoY to a whopping $586.0 million, which far exceeded estimates. Total subscribers skyrocketed 38% to 2.37 million, while the monthly online revenue per average subscriber jumped 53% to $84.
However, upon announcing expectations for Q2 revenue to land between $530.0 million and $550.0 million, stocks took a tumble. Analysts were betting on $564.3 million, as Hims & Hers shuffles away from providing a semaglutide-based weight-loss drug and reworks its sexual health product strategy.
After revealing plans to halt the sale of a compounded treatment containing semaglutide, citing a Food and Drug Administration (FDA) decision, the company would no longer view the drug as in short supply[1][2]. In February, this decision was made.
The company shared that it aims to realign investments within the Sexual Health division to generate long-term value, even if it means temporary setbacks for the business[3].
Additionally, Hims & Hers announced the appointment of Nader Kabbani, a former Amazon executive, as the Chief Operations Officer[4].
Hims & Hers' stocks have surged a staggering 90% this year.
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Behind the numbers:
- The EPS shortfall might be attributed to higher costs or investments reducing near-term profits[1].
- Aggressive marketing spend (39% of revenue) points to sustained growth and subscriber expansion[1].
- Despite the cautious guidance for Q2 revenue, the company aspires to hit $2.3 to $2.4 billion in FY25 revenue and aims for at least $6.5 billion in annual revenue by 2030[3][4][5].
- Growing subscriber numbers, thanks to strategic tie-ups and the push into personalized healthcare offerings like GLP-1 meds, indicate ongoing investments in high-growth areas[1][2].
- The company's balanced approach to profitability is demonstrated by an increase in Adjusted EBITDA to $91 million and positive free cash flow of $50 million in Q1[1].
- Anticipated collaborations with pharmaceuticals and diagnostics indicate further investment in innovation and ecosystem expansion[5].
- Despite the temporary setbacks due to realigning investments within the Sexual Health division, Hims & Hers aims to generate long-term value and reach $2.3 to $2.4 billion in revenue by the end of 2025, and over $6.5 billion in annual revenue by 2030.
- The health and wellness platform, Hims & Hers, is aspiring to expand in the finance sector, as they recently announced the appointment of Nader Kabbani, a former Amazon executive, as the Chief Operations Officer.
- To cater to the growing demand and reach a wider audience, Hims & Hers is considering trading the existing weight-loss treatments and sexual health products for innovative GLP-1 medicines and collaborations with pharmaceuticals and diagnostics, demonstrating a balanced approach to profitability.
