Hims & Hers Faces a Storm: Shares Plummet Amid Weight Loss Business Concerns
February 28, 2025, 10:18 pm
Location: United States, California, San Francisco
Employees: 1001-5000
Founded date: 2017
Hims & Hers Health, a rising star in the telehealth sector, recently found itself in turbulent waters. The company’s shares took a nosedive, dropping 22% in a single day. This dramatic fall followed the release of its fourth-quarter results, which, while showing impressive revenue growth, raised red flags about its gross margins and the future of its weight loss offerings.
The numbers tell a compelling story. Hims & Hers reported a staggering $481 million in revenue for the quarter, a remarkable 95% increase from the $246.6 million reported during the same period last year. This growth reflects the company’s aggressive expansion and the increasing demand for its services. Net income also saw a significant jump, climbing to $26.01 million, or 11 cents per share, compared to just $1.25 million, or 1 cent per share, a year prior.
However, the excitement was short-lived. Analysts had anticipated a gross margin of 78.4%, but Hims & Hers fell short, reporting only 77%. This disappointment sent investors scrambling. The market reacted swiftly, and the stock price plummeted. The company’s Chief Financial Officer, Yemi Okupe, attributed the margin miss to the scaling of its GLP-1 offerings and strategic pricing adjustments.
The GLP-1 medications, particularly semaglutide, have been a game-changer for Hims & Hers. In May, the company began prescribing compounded semaglutide, the active ingredient in Novo Nordisk’s popular weight loss drugs, Ozempic and Wegovy. This move initially fueled the company’s growth, generating over $225 million in revenue in 2024. However, the recent announcement from the U.S. Food and Drug Administration (FDA) that the shortage of semaglutide injection products has been resolved has thrown a wrench in the works.
With the FDA’s announcement, Hims & Hers indicated it would likely cease offering compounded semaglutide after the first quarter. This news was a bitter pill for investors to swallow. The company’s CEO, Andrew Dudum, noted that customers would need to seek alternative options for commercial dosing. The uncertainty surrounding the future of its weight loss offerings has left analysts concerned.
Morgan Stanley analysts described the situation as “a lot to digest.” They maintained an equal-weight rating on the stock but expressed surprise at the magnitude of the company’s 2025 guidance. Hims & Hers projected revenue between $2.3 billion and $2.4 billion for the year, with weight loss offerings expected to generate at least $725 million, excluding compounded semaglutide.
Yet, not all analysts share the same optimism. Bank of America analysts warned of “significant execution risk” as competition for GLP-1 medications heats up. They noted that competitors might redirect marketing efforts back to other products, such as treatments for erectile dysfunction and hair loss, potentially increasing Hims & Hers’ advertising costs. Their underperform rating on the stock reflects a cautious outlook.
Citi analysts, on the other hand, labeled Hims & Hers’ revenue guidance as “aspirational.” They highlighted the need for a significant acceleration in the use of the company’s other weight loss products to meet these targets. Their increased price target of $27 from $25 indicates a glimmer of hope, but they remain hesitant until more compelling growth details emerge.
The fallout from this earnings report has been swift and severe. Hims & Hers’ stock has experienced significant volatility, dropping 26% just days before the latest plunge. Investors are clearly worried about the company’s ability to maintain its momentum in a rapidly changing market.
Despite the challenges, Hims & Hers continues to offer a diverse range of services beyond weight loss. The company provides treatments for skin care, mental health, sexual health, and hair care. Revenue from non-GLP-1 products increased by 43% to $1.2 billion for the full year, surpassing previous revenue targets. This diversification may help cushion the blow from the weight loss segment’s uncertainty.
Looking ahead, Hims & Hers expects to report revenue of $520 million to $540 million for the first quarter, exceeding analysts’ expectations of $497 million. Adjusted earnings are projected to be between $55 million and $65 million. This optimistic outlook could provide a lifeline, but the company must navigate the stormy seas of investor sentiment and market competition.
In conclusion, Hims & Hers stands at a crossroads. The company has demonstrated remarkable growth and resilience, but the recent earnings report has cast a shadow over its future. As it grapples with the fallout from its weight loss business and the competitive landscape, the path forward remains uncertain. Investors will be watching closely, hoping for clarity and stability in the coming months. The stakes are high, and the journey ahead will be anything but smooth.
The numbers tell a compelling story. Hims & Hers reported a staggering $481 million in revenue for the quarter, a remarkable 95% increase from the $246.6 million reported during the same period last year. This growth reflects the company’s aggressive expansion and the increasing demand for its services. Net income also saw a significant jump, climbing to $26.01 million, or 11 cents per share, compared to just $1.25 million, or 1 cent per share, a year prior.
However, the excitement was short-lived. Analysts had anticipated a gross margin of 78.4%, but Hims & Hers fell short, reporting only 77%. This disappointment sent investors scrambling. The market reacted swiftly, and the stock price plummeted. The company’s Chief Financial Officer, Yemi Okupe, attributed the margin miss to the scaling of its GLP-1 offerings and strategic pricing adjustments.
The GLP-1 medications, particularly semaglutide, have been a game-changer for Hims & Hers. In May, the company began prescribing compounded semaglutide, the active ingredient in Novo Nordisk’s popular weight loss drugs, Ozempic and Wegovy. This move initially fueled the company’s growth, generating over $225 million in revenue in 2024. However, the recent announcement from the U.S. Food and Drug Administration (FDA) that the shortage of semaglutide injection products has been resolved has thrown a wrench in the works.
With the FDA’s announcement, Hims & Hers indicated it would likely cease offering compounded semaglutide after the first quarter. This news was a bitter pill for investors to swallow. The company’s CEO, Andrew Dudum, noted that customers would need to seek alternative options for commercial dosing. The uncertainty surrounding the future of its weight loss offerings has left analysts concerned.
Morgan Stanley analysts described the situation as “a lot to digest.” They maintained an equal-weight rating on the stock but expressed surprise at the magnitude of the company’s 2025 guidance. Hims & Hers projected revenue between $2.3 billion and $2.4 billion for the year, with weight loss offerings expected to generate at least $725 million, excluding compounded semaglutide.
Yet, not all analysts share the same optimism. Bank of America analysts warned of “significant execution risk” as competition for GLP-1 medications heats up. They noted that competitors might redirect marketing efforts back to other products, such as treatments for erectile dysfunction and hair loss, potentially increasing Hims & Hers’ advertising costs. Their underperform rating on the stock reflects a cautious outlook.
Citi analysts, on the other hand, labeled Hims & Hers’ revenue guidance as “aspirational.” They highlighted the need for a significant acceleration in the use of the company’s other weight loss products to meet these targets. Their increased price target of $27 from $25 indicates a glimmer of hope, but they remain hesitant until more compelling growth details emerge.
The fallout from this earnings report has been swift and severe. Hims & Hers’ stock has experienced significant volatility, dropping 26% just days before the latest plunge. Investors are clearly worried about the company’s ability to maintain its momentum in a rapidly changing market.
Despite the challenges, Hims & Hers continues to offer a diverse range of services beyond weight loss. The company provides treatments for skin care, mental health, sexual health, and hair care. Revenue from non-GLP-1 products increased by 43% to $1.2 billion for the full year, surpassing previous revenue targets. This diversification may help cushion the blow from the weight loss segment’s uncertainty.
Looking ahead, Hims & Hers expects to report revenue of $520 million to $540 million for the first quarter, exceeding analysts’ expectations of $497 million. Adjusted earnings are projected to be between $55 million and $65 million. This optimistic outlook could provide a lifeline, but the company must navigate the stormy seas of investor sentiment and market competition.
In conclusion, Hims & Hers stands at a crossroads. The company has demonstrated remarkable growth and resilience, but the recent earnings report has cast a shadow over its future. As it grapples with the fallout from its weight loss business and the competitive landscape, the path forward remains uncertain. Investors will be watching closely, hoping for clarity and stability in the coming months. The stakes are high, and the journey ahead will be anything but smooth.