Shares of Hims & Hers Health closed down 22% on Tuesday, a day after the telehealth company released fourth-quarter results that dissatisfied on gross margin and sparked concerns in regards to the way forward for its weight reduction business.
Hims & Hers reported $481 million in revenue for the quarter, up 95% from $246.6 million through the same period last 12 months. Net income climbed to $26.01 million, or 11 cents per share, from $1.25 million, or 1 cent per share, a 12 months prior.Â
But the corporate’s gross margin, or the profit left after accounting for the fee of products sold, was 77%, disappointing analysts who were expecting 78.4%, based on StreetAccount.
In the corporate’s quarterly call with investors on Monday, Chief Financial Officer Yemi Okupe said the scaling of the corporate’s GLP-1 offering and its strategic pricing options were accountable.
Hims & Hers in May began prescribing compounded semaglutide, the energetic ingredient in Novo Nordisk’s GLP-1 weight reduction medications Ozempic and Wegovy. Compounded drugs could be produced when brand-name treatments are in shortage, however the U.S. Food and Drug Administration announced Friday that the shortage of semaglutide injection products has been resolved.
Consequently, Hims & Hers said Monday that it would likely stop offering compounded semaglutide on its platform after its first quarter, though some consumers should still give you the chance to access personalized doses if clinically applicable. The GLP-1 offering generated greater than $225 million in revenue for the corporate in 2024.
“We can have to start out notifying customers in the approaching month or two that they may need to start out searching for alternative options on the industrial dosing,” Hims & Hers CEO Andrew Dudum said on the decision.Â
Going forward, the corporate said its weight reduction offerings will primarily consist of its oral medications and the injectable medication liraglutide, which it plans to introduce on its platform this 12 months.
Analysts at Morgan Stanley said in a note Tuesday that the corporate’s report was “rather a lot to digest.” They maintained their equal-weight rating on the stock and said they were surprised by the magnitude of the corporate’s 2025 guidance.
Hims & Hers said it expects between $2.3 billion and $2.4 billion in revenue this 12 months. The corporate added that it expects its weight reduction offerings to generate a minimum of $725 million in revenue, excluding contributions from compounded semaglutide.
“We remain positive on the long-term opportunity, highlighting the corporate’s attractive platform and solid track record that differentiate it relative to digital health and DTC comps,” the Morgan Stanley analysts said.
Bank of America analysts said that while the corporate might need some success transitioning patients to its other weight reduction offerings reminiscent of its oral medications, it would face a “significant execution risk” as supply of brand-name GLP-1s increases.
Moreover, the analysts said Hims & Hers’ competitors will likely shift marketing dollars back to other products for conditions reminiscent of erectile dysfunction and hair loss, which could put pressure on its promoting costs. They reiterated their underperform rating on the stock.
“Overall, we don’t see upside to 2025 revenue guidance and think the beat and lift story is probably going over within the near-term,” the Bank of America analysts wrote in a note Tuesday.
Citi analysts meanwhile said they think Hims & Hers’ revenue guidance is “aspirational,” as it could require “significant acceleration” in the usage of its other weight reduction products. They said they’re less confident in regards to the success of those offerings.
Even so, the analysts increased their price goal on the stock to $27 from $25.
“We await a more compelling entry point and more details on growth ex-GLP-1s before we turn into more constructive,” they wrote in a Monday note.
— CNBC’s Michael Bloom contributed to this report.
