What risks could derail HIMS's earnings in 2025?

Hims & Hers Health faces several risks that could derail its earnings in 2025:

1. **Regulatory Challenges and FDA Decisions**: The FDA's crackdown on compounded semaglutide and the recent ruling to remove Eli Lilly's tirzepatide from the drug shortage list could significantly impact HIMS's ability to offer its weight-loss drug solutions. This may lead to a loss of revenue from its GLP-1 products, which are a key growth driver.
2. **Increased Competition**: Novo Nordisk's direct-to-consumer offering for Wegovy at a competitive price point introduces a significant challenge to HIMS's pricing strategy and market share. Additionally, the removal of semaglutide from the drug shortage list adds further competition and uncertainty to HIMS's direct-to-consumer channel opportunities.
3. **Market Volatility and Investor Sentiment**: The market's reaction to HIMS's advertising practices and the legality of its weight loss drug compounds has been contentious, which could lead to volatility in its stock price. Investor sentiment could be affected by these controversies, potentially leading to a decline in stock performance.
4. **Potential Legal and Regulatory Issues**: The FDA's declaration that the semaglutide shortage has ended, coupled with a lawsuit questioning the FDA’s evidence for this decision, adds further uncertainty to the market. This could lead to legal challenges and additional regulatory scrutiny, affecting HIMS's operations and profitability.
5. **Dependence on GLP-1 Products**: HIMS's projected revenue growth from personalized GLP-1 products appears uncertain, and there is skepticism about meeting the 2025 revenue guidance. The company's weight-loss drug offerings, a key driver of recent growth, are subject to FDA regulations and market competition, which could affect their sustainability.
6. **Gross Margin Pressure and Rising Costs**: Despite strong revenue growth, HIMS faces margin pressure and rising costs, which could impact gross margins and ultimately affect earnings. The company's aggressive marketing spend also raises questions about its long-term profitability.
7. **Market Overvaluation**: With a high price-to-earnings ratio, HIMS's stock appears overvalued, which could lead to a valuation correction if earnings do not meet expectations. This could be exacerbated by the challenges and uncertainties mentioned above.

In conclusion, HIMS & Hers Health faces a complex landscape of regulatory challenges, competitive pressures, and market uncertainties that could potentially derail its earnings in 2025. The company's ability to navigate these risks and sustain its growth will be crucial for its future performance.