Hims & Hers Health (HIMS) has seen its shares decline over 17% in the past week since the U.S. Food and Drug Administration (FDA) announced the resolution of the shortage of GLP-1 (semaglutide) injection products, including Novo Nordisk’s weight loss drug Wegovy and diabetes treatment Ozempic. This announcement could significantly impact Hims & Hers Health, which prescribes compounded semaglutide. The company posted a 69% increase in revenue year-over-year in 2024, a third of which was attributable to its GLP-1 business.
GLP-1 Helps Drive Revenue Growth
Hims & Hers Health is a telehealth provider that connects consumers to licensed healthcare professionals. They offer an array of prescription and non-prescription products and services related to general wellness, sexual health, skincare, and haircare, which they can purchase directly from their website and mobile application.
As a result of the FDA’s resolution of the shortage of semaglutide injection products, it will start enforcing violations against compounders who create custom substitutes for branded drugs in the following 60 to 90 days. Semaglutide is a key ingredient in Novo Nordisk’s popular weight-loss drug Wegovy and diabetes medication Ozempic, which has seen a dramatic increase in demand in recent years. Hims & Hers Health began offering its less expensive compounded semaglutide to patients in May amidst supply and insurance challenges. The company aims to sustain its compounded semaglutide sales after the official end of the shortage. It is likely to use legal channels to explore how to continue distributing GLP-1s moving forward.
The company announced financial results for Q4 2024 that marked significant growth, with revenue jumping to $481.1 million, a 95% year-over-year increase from $246.6 million reported in Q4 2023. Adjusted EBITDA and net cash from operating activities also increased to $54.1 million and $86.4 million, respectively, while free cash flow rose to $59.5 million. For 2024, revenue was $1.47 billion, up by 69% year-over-year. Additionally, adjusted EBITDA and net cash from operating activities increased to $176.9 million and $251.1 million, respectively, while free cash flow rose to $198.3 million. Revenue excluding GLP-1 increased 43% year-over-year to over $1.2 billion in 2024, demonstrating that the company’s growth is not solely reliant on the business line.
Analysts Remain Cautious
Analysts following the company have taken a cautious view of the stock. However, Leerink’s Michael Cherny has expressed optimism about the potential for a ‘reset’ in Hims & Hers, which could provide unrestricted market access for the patented drug and the wider GLP-1 compounding sphere. Leveraging this opportunity, however, requires Hims to find a legal pathway to sell personalized doses of semaglutide.
Hims & Hers is rated a Hold overall, based on the recent recommendations of 10 analysts. The average price target for HIMS stock is $41.88, representing a potential downside of -18.38% from current levels.
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