Hims & Hers Earnings: Growth Outlook & Profitability Pressures

Summary

Hims & Hers released its Q1 2025 earnings, showing solid subscriber growth of 9% year-over-year to 2.58 million, but a 6% decline in average revenue per subscriber, now around $80. This quarter reflects the end of a legal exemption for GLP-1 compounding, with new branded GLP-1 products expected to drive future revenue and potentially increase spending per subscriber, with some treatments costing over $300. The company raised its full-year revenue guidance to between $2.8 and $3 billion, an increase of $100 million, signaling a stronger second half of the year. However, adjusted EBITDA guidance saw a slight decrease, suggesting increased investment in growth at the expense of near-term profitability. Management is prioritizing growth over margins, aiming for over 30% growth in 2026, which could lead to a significant long-term return. The strategy to become a healthcare platform company, expanding into new markets and modalities, remains intact, with acquisitions like Zava contributing to international growth. The company generated $90 million in cash flow from operations and has $751 million in cash reserves. The potential legalization of peptides could offer further future upside, though it's not currently included in guidance.