Hims & Hers Health, the tele-pharmacy known for selling copycat versions of popular weight-loss drugs, reported its fourth-quarter earnings for Fiscal Year 2024, surpassing Wall Street expectations but facing significant stock trading hurdles afterward. Despite solid numbers, concerns surrounding FDA decisions prompted investors to react negatively.
For Q4, Hims & Hers reported earnings per share of $0.12, narrowly above the $0.11 anticipated by analysts polled by FactSet. The company’s revenue also exceeded expectations, reaching $481.1 million, compared to the consensus estimate of $470.3 million, showcasing impressive growth as it marks its fifth consecutive profitable quarter.
CEO Andrew Dudum noted, "Our revenue hit $481.1 million, surpassing the $470.3 million expected," illustrating the company’s dynamism during the reporting period. Alongside positive earnings, Hims & Hers provided optimistic guidance for the first quarter of 2025, projecting revenue between $520 million and $540 million, which is significantly above the $497 million analysts had forecasted.
Interestingly, revenue from non-GLP-1 drugs, which Hims & Hers began offering recently, accounted for $1.2 billion of the total $1.4 billion revenue for 2024. This suggests the company sold nearly $200 million worth of these copycat weight-loss drugs last year. CFO Yemi Okupe emphasized the importance of their mission, stating their success is attributed to "democratizing access to high-quality, personalized care."
Despite the good news, investors were quick to respond with caution. Following the announcements, Hims & Hers’ stock dropped more than 15% during after-hours trading. Analysts suggest the declining stock performance is linked to regulatory hurdles posed by the FDA, which recently announced the end of the shortage of semaglutide, the active ingredient found in Novo Nordisk’s Ozempic and Wegovy. This decision means Hims & Hers will struggle to sell compounded versions of these drugs without regulatory pushback.
Hims & Hers stated in its shareholder letter, “This ruling could constrain our ability to continue providing access to compounded semaglutide,” highlighting the uncertainty facing the company's growth strategy. The letter included footnotes emphasizing potential limitations after current inventory is sold, raising more questions about future profitability for the company.
The FDA's ruling, which restricts compounding pharmacies from making exact copies of Novo's drugs, introduced significant apprehension within the investor community, disrupting the momentum the company had built through its weight-loss medication marketing. Michael Cherny, an analyst at Leerink Partners, discussed the situation, indicating, "We do see potential for a reset in the stock after it had been clearly driven up by excitement over the broader weight loss opportunity," reflecting the fragile balance between market excitement and regulatory constraints.
Wall Street analysts have expressed mixed feelings on the stock’s performance. While Hims & Hers performed remarkably well over the past year, shares have surged over 439% year-over-year, analysts have recommended holding or selling shares, with projections averaging $41.88 per share, indicating 18.4% downside risk. More than half of the 15 analysts tracked by Bloomberg recommend holders to be cautious.
The market is anxiously observing how Hims & Hers can maintain growth as the competitive and regulatory landscapes evolve. They face the challenge of sustaining this momentum, especially as historical strategies are transformed by FDA decisions impacting drug availability. With the anticipated Q1 guidance, investors hope for continued positive growth, but the pressure is on the company to adapt quickly to shifting regulatory demands.
Looking forward, Hims & Hers reported guidance for FY 2025 revenue projections between $2.30 billion and $2.40 billion, significantly above analysts’ estimates of $2.09 billion. Should the company achieve these targets, it may solidify investor confidence. Yet, analysts caution about high expectations surrounding earnings future growth.
To wrap up, the recent developments position Hims & Hers Health at a crossroads. The company’s ambitious outlook for Q1 and FY 2025 stands at odds with immediate market reactions following their earnings report, especially amid growing fears of regulatory constraints. All eyes are now on how the telehealth giant pivots to navigate these challenges and seize opportunities as they arise.