What goes up can come down. Investors who jumped on the Hims & Hers Health (HIMS 4.20%) bandwagon have experienced this pain first-hand.
Shares of the health and wellness platform operator skyrocketed more than 670% between Jan. 1, 2024, and Feb. 19, 2025. However, this sizzling momentum came to a screeching halt in recent weeks. Hims & Hers stock plunged more than 50% at one point. Is this once-high-flying healthcare stock a smart buy now?
NYSE: HIMS
Key Data Points
Behind Hims & Hers' huge decline
Much of the excitement over Hims & Hers has been connected to the company's sales of compounded versions of GLP-1 inhibitor semaglutide. Novo Nordisk markets semaglutide as a treatment for type 2 diabetes under the brand name Ozempic and for treating weight loss under the brand name Wegovy.
Hims & Hers was able to sell compounded semaglutide only because of a U.S. Food and Drug Administration (FDA) loophole that allowed such sales when a national shortage of the drug existed. However, the FDA declared on Feb. 21, 2025, that this shortage was over.
CFO Oluyemi Okupe confirmed on Hims & Hers Health's fourth-quarter earnings call a few days after the FDA announcement that semaglutide "will not be offered on the platform after the first quarter." The company's guidance of $725 million in full-year 2025 from its weight-loss business excluded semaglutide sales.
Some good news
Despite the shellacking Hims & Hers Health stock took after the FDA's decision, there is some good news for investors. For one thing, the stock has rebounded somewhat after bottoming out. That could be a sign that the worst is over.
Hims & Hers' revenue guidance for 2025 was also quite good when put into context. The company projects revenue of between $2.3 billion and $2.4 billion. The midpoint of that range reflects a year-over-year increase of 59%.
Over two-thirds of Hims & Hers' revenue comes from products unrelated to weight loss. Men's dermatology, women's dermatology, mental health, and sexual health are all expected to generate sales this year of more than $100 million. Dermatology is an especially fast-growing area, with the number of subscribers in men's and women's dermatology jumping more than 55% and 100% year over year, respectively, in the fourth quarter of 2024.
Importantly, Hims & Hers Health also has other weight-loss offerings beyond compounded semaglutide. The company's oral weight-loss products remain very popular, particularly with costs running as low as $69 per month. CEO Andrew Dudum emphasized in the Q4 earnings call that these products can cost less than half the price of semaglutide.
Also, Hims & Hers plans to launch a generic version of Novo Nordisk's GLP-1 inhibitor Victoza (liraglutide) later this year. Dudum said, "I think we have a lot of excitement for that medication because we think it will be a nice thing to add to the arsenal and be very successful for a certain group of people."
Is this beaten-down stock a smart pick now?
A sell-off of over 50% of a stock that's still on track to deliver exceptional revenue growth would ordinarily reflect an overreaction by investors. Is that the case with Hims & Hers Health? I don't think so -- for one simple reason: Even after the sharp decline, Hims & Hers trades at nearly 63 times forward earnings.
Perhaps Hims & Hers will be able to continue its remarkable growth for years to come despite losing the ability to sell semaglutide. On the other hand, the potential approval of new obesity drugs, notably including an oral version of semaglutide as well as other more powerful medications, could make it harder for companies such as Hims & Hers to compete in the weight-loss market.
Maybe Hims & Hers Health's plunge was overdone. But there's a pretty good argument to be made that the stock had risen much more than was justified based on its business prospects before the FDA decision led to a sharp sell-off.
