Hims & Hers: From GLP-1s to Menopause
One of the Asymmetric Universe stocks that I fundamentally disagree with most of the market’s commentary is $Hims & Hers Health Inc.(HIMS)$ . Even today, a Wall Street analyst downgraded the stock to a sell with a $25 price target because of changing expectations for GLP-1s. 🤷
He expects GLP-1s to be only $135 million in revenue in 2025 from previous expectations of $400 million. Reminder, this is a business that didn’t exist 8 months ago!
The company swings wildly day-to-day on GLP-1 news but GLP-1s account for very little of the company’s revenue or subscriptions. A long-term view of the company — which is what I do on Asymmetric Investing — shows a very different story than the GLP-1 focus and I think presents an opportunity for investors.
Growth Beyond GLP-1s
I don’t build financial models like Wall Street analysts (because they’re always wrong), but I do want to understand just how important GLP-1s are to the business. And the answer is, not very.
We ended the quarter with over 2 million subscribers, representing a 44% increase from the third quarter of last year. While our GLP-1 offering is resulting in incremental users coming to the platform, the majority of our subscriber growth is coming from our non-GLP-1 related offerings. Our subscriber base, excluding GLP-1s, grew approximately 40% year-over-year.
Yemi Okupe, CFO
Napkin math time.
Hims & Hers announced access to GLP-1s on May 20, 2024, or 41 days before the end of the second quarter. Let’s assume very little impact on the business from GLP-1s in Q2 2024, which means Hims & Hers has only reported 1 quarter of results impacted by GLP-1s.
The company ended Q3 2023 with 1.43 million subscribers and Q2 2024 with 1.86 million subscribers. Zero sequential growth between Q2 2024 to Q3 2024 would have led to 31% annual growth in Q3 2024. To get to 40% growth, the company would have needed to add 132,400 subscribers not associated with GLP-1s or 7% sequential subscriber growth.
In other words, the company is still growing subscribers at an annualized rate of about 32% without GLP-1s.
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