Update shared on03 Jul 2025
Fair value Decreased 24%Update: Still Compelling, but Caution Warranted After Novo Nordisk Fallout
Hims & Hers Health (HIMS) has been one of the most impressive growth stories in public markets, but recent developments have introduced material uncertainty in the medium term. While I remain confident in the long-term thesis, I’m becoming more cautious as regulatory tensions begin to affect execution.
Recent Performance: Hypergrowth Continues
Q1 2025 revenue reached $586M, up 111% year over year. Net income quadrupled to $49.5M. Subscriber growth remained strong at 2.4 million, up 38% year over year, while ARPU climbed 53% to $84. The company generated $109M in operating cash flow and $50M in free cash flow. Adjusted EBITDA margin topped 15%, highlighting strong underlying profitability.
Even excluding the new GLP-1 segment, the core business grew approximately 43% in 2024, a sign of healthy demand across established categories.
Novo Nordisk Fallout: A Medium-Term Overhang
In April, Hims announced a partnership with Novo Nordisk to offer Wegovy through its platform. Just two months later, Novo abruptly cancelled the deal, citing concerns about Hims continuing to offer compounded semaglutide after the FDA ended the shortage designation. This led to a 35% single-day drop in the share price.
While Hims has since halted sales of compounded semaglutide and reaffirmed its full-year guidance, this episode underscores how quickly regulatory changes can impact operations. It also signals a potential shift toward tighter oversight of compounding practices and telehealth prescribing.
Long-Term Vision Intact, but Execution Risk Has Risen
Hims is still targeting $6.5B in revenue and $1.3B in adjusted EBITDA by 2030, implying a 22% CAGR. The long-term opportunity remains significant. However, the road ahead may be slower and more complex.
This is no longer just a story of fast growth. Hims must now prove it can scale while navigating a shifting regulatory landscape, maintain trust with partners, and avoid further compliance setbacks. The loss of the Wegovy partnership is not a thesis breaker, but it is a reality check.
Positioning
I continue to hold my position. My long-term conviction is intact, particularly given the strength of the core business and the company's ambition to become a vertically integrated healthcare platform. That said, I’m watching the regulatory narrative closely as it will likely shape the pace of growth in the quarters ahead.
Disclaimer
BlackGoat is an employee of Simply Wall St, but has written this narrative in their capacity as an individual investor. BlackGoat has a position in NYSE:HIMS. Simply Wall St has no position in any companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimate's are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.