Alright, let's cut the PR fluff and dive into what's actually happening with Hims & Hers (HIMS). The headlines are screaming about revenue beats and potential Wegovy deals, but as any good data analyst knows, the devil's in the details.
Q3: A Subscriber Story or a Profit Problem?
First, the good news (or at least, the news they want you to focus on): Q3 revenue came in at $600 million, exceeding the $580.2 million expected by analysts. As reported by Reuters, Hims & Hers rises after Q3 revenue beat. And the subscriber base? Up to 2.47 million, a 21% jump year-over-year. On the surface, this paints a picture of a company firing on all cylinders. Growth, growth, growth!
But let's pump the brakes for a second. While revenue exceeded expectations, adjusted profit per share was lower than expected – 6 cents versus an estimated 10 cents. That's a discrepancy worth digging into. Are they spending more to acquire those new subscribers? Are margins shrinking as competition heats up in the telehealth space? These are the questions the press releases conveniently gloss over.
I've looked at hundreds of these filings, and a miss on EPS against a revenue beat always raises an eyebrow. You can't spend your way to profitability forever. Eventually, the unit economics need to make sense.
The Wegovy Wildcard: Hope or Hype?
Then there's the Wegovy angle. Word on the street (or rather, on the financial news sites) is that Hims & Hers is in talks with Novo Nordisk (NVO) about offering Wegovy through their platform. If true, that could be a significant catalyst. The demand for GLP-1 weight loss drugs is undeniable, and Hims & Hers already has a built-in telehealth infrastructure.
But let's not get ahead of ourselves. The source article regarding talks with Novo for Wegovy is currently inaccessible, due to suspected use of automation tools, so it's difficult to verify the details. This could be a game-changer, or it could be nothing more than speculative chatter designed to boost the stock price.
And even if the deal materializes, there are plenty of hurdles to clear. What will the pricing structure look like? How will they handle the potential side effects and medical oversight required for a drug like Wegovy? And, crucially, can they secure a reliable supply of the medication, given the current shortages?
The YTD Rally: Justified or Overblown?
Finally, let's address the elephant in the room: HIMS stock is up 83.6% year-to-date (as of the last close). That's a massive run-up, and it begs the question: Is it justified?
A lot of that growth seems priced in already. The market is clearly optimistic about the company's prospects, but optimism doesn't pay the bills. Eventually, Hims & Hers needs to translate that subscriber growth and revenue into consistent, sustainable profits.
Is This Growth Sustainable?
In my opinion, there's a real risk of a correction if they stumble. The telehealth space is becoming increasingly crowded, with established players like Teladoc (TDOC) and Amwell (AMWL), not to mention the potential entry of Amazon (AMZN) into the market. Hims & Hers needs to prove that it can differentiate itself and maintain its growth trajectory in the face of intensifying competition.
