Hims & Hers Health (NYSE: HIMS), a telehealth platform, reported Q4 sales of $481 million and adjusted earnings per share of $0.23, surpassing consensus estimates of $470 million and $0.22, respectively. The company’s weight-loss offerings continued to be a key driver of growth. Furthermore, the company’s forward-looking guidance exceeded market expectations. However, declining profitability overshadowed these positive results, weighing on the stock price post the results announcement.
Separately, look at our take on – Is Microsoft Stock Too Expensive To Buy At $400?
HIMS stock has seen remarkable growth since the beginning of 2024, with returns of 477%, significantly outperforming the broader S&P 500 index, up 28%. This surge can be attributed to the shortage of GLP-1 drugs used for obesity treatment, which allowed HIMS to capitalize on the demand for compounded versions of these medications. However, as the supply of GLP-1 drugs has now normalized, Hims & Hers is no longer permitted to sell compounded versions. The company can, however, continue to offer personalized weight-loss treatment plans designed to meet individual patient needs. While HIMS stock has had a phenomenal run, if you want an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
Subscriber Growth Fuels Strong Q4 Performance
Hims & Hers revenue of $481 million in Q4 was up a solid 95%, driven by a 45% rise in subscribers to 2.2 million. The monthly online revenue per average subscriber grew 38% y-o-y to $73. Among other key metrics, the net orders grew 22%, while the average order value surged 63% during the quarter.
However, the company reported gross margin of 77% in Q4’24, lower than the 83% figure it reported in the prior-year quarter. This figure was also lower than the street estimates of over 78%. Its operating margin expanded from -0.2% to 3.9% over the same period. On a reported basis, the company’s bottom line came in at $0.11 versus $0.01 in the prior-year quarter. On an adjusted basis, earnings of $0.23 per share compared with $0.08 in the prior-year quarter.
Looking forward, Hims & Hers expects its Q1 sales to be $530 million and adjusted EBITDA of $60 million, at the mid-point of the provided range. For the full year, sales are expected to be $2.35 billion and adjusted EBITDA of $295 million. The top-line estimates are much better than $495 million for Q1 and $2.09 billion for the full-year, per the consensus estimates.
HIMS Stock Has Been On A Volatile Ride
Despite HIMS shares delivering impressive returns over the last year or so, the stock’s journey has been marked by significant price swings. Returns for the stock were -55% in 2021, -2% in 2022, 39% in 2023, and 172% in 2024.
In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Is HIMS Stock Overvalued At $40?
At levels of around $40 (as indicated in the pre-market), HIMS stock is trading at 6.4x trailing revenues, much higher than the stock’s average P/S ratio of 2.8x over the last three years. Given the wide disparity between historical and current valuations, we believe the potential upside from strong sales growth and the generic liraglutide launch is already reflected in the stock price. For investors prioritizing robust long-term gains, waiting for a pullback in HIMS stock may be a more prudent strategy, in our view.
Wondering how IONQ stock will fare post-earnings? Check out – Will The Q4 Results Save IONQ Stock After A 20% Plunge?
Invest with Trefis
Market Beating Portfolios | Rules-Based Wealth