Shares of Hims & Hers Well being fell 28% on Tuesday, a day after the telehealth firm launched fourth-quarter outcomes that disillusioned on gross margin and sparked issues about the way forward for its weight reduction enterprise.
Hims & Hers reported $481 million in income for the quarter, up 95% from $246.6 million throughout the identical interval final yr. Internet earnings climbed to $26.01 million, or 11 cents per share, from $1.25 million, or 1 cent per share, a yr prior.
However the firm’s gross margin, or the revenue left after accounting for the price of items offered, was 77%, disappointing analysts who had been anticipating 78.4%, based on StreetAccount.
Within the firm’s quarterly name with traders on Monday, Chief Monetary Officer Yemi Okupe stated the scaling of the corporate’s GLP-1 providing and its strategic pricing choices had been accountable.
Hims & Hers in Could began prescribing compounded semaglutide, the energetic ingredient in Novo Nordisk’s GLP-1 weight reduction drugs Ozempic and Wegovy. Compounded medicine may be produced when brand-name therapies are in scarcity, however the U.S. Meals and Drug Administration introduced Friday that the scarcity of semaglutide injection merchandise has been resolved.
Consequently, Hims & Hers stated Monday that it’s going to probably cease providing compounded semaglutide on its platform after its first quarter, although some shoppers should still be capable of entry customized doses if clinically relevant. The GLP-1 providing generated greater than $225 million in income for the corporate in 2024.
“We should begin notifying prospects within the coming month or two that they might want to begin searching for different choices on the business dosing,” Hims & Hers CEO Andrew Dudum stated on the decision.
Going ahead, the corporate stated its weight reduction choices will primarily include its oral drugs and the injectable remedy liraglutide, which it plans to introduce on its platform this yr.
Analysts at Morgan Stanley stated in a word Tuesday that the corporate’s report was “quite a bit to digest.” They maintained their equal-weight ranking on the inventory and stated they had been stunned by the magnitude of the corporate’s 2025 steerage.
Hims & Hers stated it expects between $2.3 billion and $2.4 billion in income this yr. The corporate added that it expects its weight reduction choices to generate no less than $725 million in income, excluding contributions from compounded semaglutide.
“We stay optimistic on the long-term alternative, highlighting the corporate’s enticing platform and stable monitor report that differentiate it relative to digital well being and DTC comps,” the Morgan Stanley analysts stated.
Financial institution of America analysts stated that whereas the corporate might need some success transitioning sufferers to its different weight reduction choices equivalent to its oral drugs, it should face a “important execution threat” as provide of brand-name GLP-1s will increase.
Moreover, the analysts stated Hims & Hers’ rivals will probably shift advertising {dollars} again to different merchandise for circumstances equivalent to erectile dysfunction and hair loss, which may put strain on its promoting prices. They reiterated their underperform ranking on the inventory.
“Total, we don’t see upside to 2025 income steerage and suppose the beat and lift story is probably going over within the near-term,” the Financial institution of America analysts wrote in a word Tuesday.
Citi analysts in the meantime stated they suppose Hims & Hers’ income steerage is “aspirational,” as it will require “important acceleration” in the usage of its different weight reduction merchandise. They stated they’re much less assured in regards to the success of those choices.
Even so, the analysts elevated their worth goal on the inventory to $27 from $25.
“We await a extra compelling entry level and extra particulars on development ex-GLP-1s earlier than we turn out to be extra constructive,” they wrote in a Monday word.
— CNBC’s Michael Bloom contributed to this report.
