What Happened?
Shares of telehealth company Hims & Hers Health (NYSE: HIMS) fell 8% in the afternoon session after the U.S. Food and Drug Administration raised concerns about unapproved GLP-1 drugs used for weight loss, including versions (compounded) prescribed by Hims & Hers. There had been growing market demand for weight loss drugs in recent months, and they've evolved to be a significant driver of sales growth for manufacturers and distributors. The FDA's concerns could indicate tighter regulatory scrutiny, which restricts the ability of suppliers like Hims & Hers to get the affected versions to consumers.
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What The Market Is Telling Us
Hims & Hers Health’s shares are extremely volatile and have had 77 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 27.6% on the news that the company delivered mixed fourth-quarter 2024 results: It added fewer customers than expected, and EBITDA came in a bit short, but revenue soared year over year, easily beating Wall Street's forecasts. This jump came from surging demand in the weight-loss business, which remained a key growth engine. That said, EBITDA slightly missed estimates, and gross margin fell from 83% to 77%, signaling rising costs to attract and serve customers.
Looking ahead, Hims & Hers provided optimistic guidance, projecting full-year 2025 revenue and adjusted EBITDA well above analysts' expectations.
Overall, we think this was still a solid quarter with some key areas of upside, but the worse-than-anticipated customer additions and EBITDA seemed to be sending shares lower. We also note that expectations were high going into the print as the stock was up 104% year-to-date before the announcement.
Hims & Hers Health is up 25% since the beginning of the year, but at $31.49 per share, it is still trading 54.2% below its 52-week high of $68.74 from February 2025. Investors who bought $1,000 worth of Hims & Hers Health’s shares 5 years ago would now be looking at an investment worth $3,336.
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