Shares of Hims & Hers Health closed down 22% on Tuesday, a day after the telehealth company released fourth-quarter results that disappointed on gross margin and sparked concerns about the future of its weight loss business.
Hims & Hers reported $481 million in revenue for the quarter, up 95% from $246.6 million during the same period last year. Net income climbed to $26.01 million, or 11 cents per share, from $1.25 million, or 1 cent per share, a year prior.
But the company’s gross margin, or the profit left after accounting for the cost of goods sold, was 77%, disappointing analysts who were expecting 78.4%, according to StreetAccount.
In the company’s quarterly call with investors on Monday, Chief Financial Officer Yemi Okupe said the scaling of the company’s GLP-1 offering and its strategic pricing options were to blame.
Hims & Hers in May started prescribing compounded semaglutide, the active ingredient in Novo Nordisk’s GLP-1 weight loss medications Ozempic and Wegovy. Compounded drugs can be produced when brand-name treatments are in shortage, but the U.S. Food and Drug Administration announced Friday that the shortage of semaglutide injection products has been resolved.
As a result, Hims & Hers said Monday that it will likely stop offering compounded semaglutide on its platform after its first quarter, though some consumers may still be able to access personalized doses if clinically applicable. The GLP-1 offering generated more than $225 million in revenue for the company in 2024.
“We will have to start notifying customers in the coming month or two that they will need to start looking for alternative options on the commercial dosing,” Hims & Hers CEO Andrew Dudum said on the call.
Going forward, the company said its weight loss offerings will primarily consist of its oral medications and the injectable medication liraglutide, which it plans to introduce on its platform this year.
Analysts at Morgan Stanley said in a note Tuesday that the company’s report was “a lot to digest.” They maintained their equal-weight rating on the stock and said they were surprised by the magnitude of the company’s 2025 guidance.
Hims & Hers said it expects between $2.3 billion and $2.4 billion in revenue this year. The company added that it expects its weight loss offerings to generate at least $725 million in revenue, excluding contributions from compounded semaglutide.
“We remain positive on the long-term opportunity, highlighting the company’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 company might have some success transitioning patients to its other weight loss offerings such as its oral medications, it will face a “significant execution risk” as supply of brand-name GLP-1s increases.
Additionally, the analysts said Hims & Hers’ competitors will likely shift marketing dollars back to other products for conditions such as erectile dysfunction and hair loss, which could put pressure on its advertising costs. They reiterated their underperform rating on the stock.
“Overall, we do not see upside to 2025 revenue guidance and think the beat and raise story is likely over in 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 would require “significant acceleration” in the use of its other weight loss products. They said they are less confident about the success of these offerings.
Even so, the analysts increased their price target on the stock to $27 from $25.
“We await a more compelling entry point and more details on growth ex-GLP-1s before we become more constructive,” they wrote in a Monday note.
— ‘s Michael Bloom contributed to this report.
