To The Moon

$Hims & Hers Health Inc.(HIMS)$

Shares of Hims & Hers Health (NYSE: HIMS) fell sharply—dropping over 12% in the latest trading session—following the release of the company’s quarterly earnings report, which failed to meet investor expectations despite robust underlying metrics.

Hims & Hers has been one of the standout performers this year, with the stock rising more than 129% year-to-date. I’ve maintained a Buy rating on the stock throughout 2025, and while the market reacted negatively to the latest results, it's important to examine the full picture before drawing conclusions. In this breakdown, I’ll walk through the company’s recent quarterly performance, highlight key operating metrics, update my proprietary DCF valuation model, and offer a revised investment verdict for Hims & Hers Health.

Quarterly Earnings Snapshot: Strong Topline, Disappointing Cash Flow

For the most recently completed quarter, Hims & Hers delivered 73% year-over-year revenue growth, reaching $545 million. Net income surged by 220% to $43 million, while adjusted EBITDA rose by 109% to $82 million. On the surface, these growth rates suggest the business continues to execute well.

However, cash flow performance told a different story. Operating cash flow declined to $19 million, compared to $54 million in the same period last year. Free cash flow also weakened, posting a negative $69 million versus a positive $48 million previously. According to management, the shortfall stemmed from strategic investments in logistics and fulfillment infrastructure aimed at improving scalability and operational efficiency.

While such reinvestments often weigh on short-term free cash flow, they can support long-term margin expansion. Still, cash flow softness spooked investors, triggering a broad sell-off despite stellar headline numbers.

Subscriber Growth and ARPU Expansion: A Compelling Value Proposition

One of the more promising developments was continued strength in the company’s subscriber base. Total subscribers rose 31% year-over-year to 2.4 million, compared to 1.9 million in the prior-year quarter. Even more impressively, average revenue per user (ARPU) increased 30% to $57.

This dual expansion—growing both subscriber count and ARPU—demonstrates Hims & Hers is not only acquiring new customers at scale but is also succeeding in deepening customer monetization. From a business quality standpoint, this is an encouraging trend. Typically, newer cohorts contribute lower ARPU compared to more tenured customers, so simultaneous ARPU and subscriber growth signals strong product-market fit and perceived customer value.

Companies capable of growing ARPU while expanding their customer base are often leveraging high customer satisfaction, retention, and upsell potential—hallmarks of scalable, consumer-centric business models. In my investment framework, customer value proposition ranks among the most critical criteria when assessing long-term business quality. In this area, Hims & Hers scores exceptionally well.

Evaluating Intrinsic Value: Proprietary DCF Points to Overvaluation

Based on my updated discounted cash flow (DCF) model, I estimate the intrinsic value per share of Hims & Hers at approximately $41. Following the post-earnings decline, the stock trades around $55, implying a premium of roughly 34% to my calculated fair value.

From a pure DCF standpoint, this suggests the stock is currently overvalued. However, I consider valuation from multiple angles rather than relying solely on one metric.

For instance, looking at Hims & Hers' forward price-to-earnings (P/E) ratio—retrieved via Fiscal.ai, my preferred data platform—the company currently trades at a forward P/E of 72x. That’s materially higher than the broader S&P 500’s average range of 20–23x. On the surface, this appears expensive. But context is critical.

Hims & Hers is growing revenues by over 70%, expanding earnings by triple digits, and increasing key user metrics by 30% or more. In that light, a premium multiple is justified. High-growth digital health companies, particularly those with subscription-driven, vertically integrated platforms, typically command elevated valuations. Therefore, on a relative basis, Hims & Hers could be considered fairly valued to slightly overvalued depending on one's growth assumptions.

Beyond Valuation: Scoring High on Five Key Pillars

While valuation is important, it is only one of the six factors in my proprietary investing framework. The other five—customer value proposition, unit economics, total addressable market (TAM), competitive moat, and capital allocation—are equally vital in assessing long-term investment quality.

In the case of Hims & Hers:

• Customer Value Proposition: Strong ARPU and subscriber growth indicate high satisfaction and perceived value.

• Unit Economics: Rapidly scaling with expanding margins despite infrastructure investments.

• Total Addressable Market: The consumer digital health space is still in its early innings, offering years of runway.

• Moat and Brand: A growing and recognizable brand in direct-to-consumer telehealth.

• Capital Allocation: Management is investing prudently to support growth infrastructure.

On these five non-valuation metrics, Hims & Hers scores extremely well, reinforcing my conviction despite short-term valuation concerns.

Investment Verdict: Maintain Buy Rating Despite Market Overreaction

Despite the recent drop and signs of overvaluation based on my DCF model, I am maintaining my Buy rating on Hims & Hers. The company continues to execute at a high level across critical business drivers. The recent sell-off appears to be more of a reaction to cash flow headwinds rather than a signal of deteriorating fundamentals.

However, for more conservative investors, I acknowledge that current price levels offer less margin of safety. If you're seeking a larger discount to intrinsic value, it may be prudent to place HIMS on a watchlist and await a better entry point. But for those with a higher risk tolerance and a long-term investment horizon, I believe the current dip presents a reasonable buying opportunity, especially considering the company’s accelerating growth metrics and differentiated business model.

Key Takeaways

1. Hims & Hers stock declined over 12% despite beating expectations on growth metrics.

2. Revenue rose 73%, net income surged 220%, and adjusted EBITDA climbed 109%.

3. Cash flow weakness due to infrastructure reinvestments led to negative investor sentiment.

4. The company added 2.4 million subscribers, up 31%, while ARPU increased 30%.

5. DCF-based intrinsic value is $41/share vs. a market price of ~$51-55, indicating modest overvaluation.

6. Despite valuation concerns, strong fundamentals and long-term tailwinds justify a continued Buy rating.

In sum, while the market fixated on short-term free cash flow issues, the underlying strength of Hims & Hers’ business model remains intact. For long-term investors focused on quality growth at a reasonable price, the dip may prove to be an attractive opportunity to accumulate shares.