Hims & Hers Health Earnings Preview: What to Watch Ahead of Q4 Report

Hims & Hers Health (NYSE: HIMS) is set to report its fourth-quarter earnings after the market close on Monday, February 24. Investors and analysts will be closely watching the report, as the stock has been one of the most explosive movers in the market, surging over 400% in the past year and 107% year-to-date. The company’s rapid expansion in telehealth services, along with its entry into the weight-loss drug market, has driven massive investor interest, but recent volatility suggests traders are bracing for a major earnings reaction.

Analysts expect earnings per share (EPS) of 0.11 and revenue of $470.3 million, representing a 1,000% increase in EPS and over 90% revenue growth compared to the same quarter last year. While strong results are anticipated, the market’s focus will be on forward guidance, compounded GLP-1 drug sales, and the company’s ability to sustain momentum in a post-shortage environment.

Key Metrics and Business Drivers to Watch

Hims & Hers Health has positioned itself as a leader in direct-to-consumer telehealth, offering a range of treatments for hair loss, mental health, sexual health, and more recently, weight management through GLP-1 agonists like semaglutide, the active ingredient in Wegovy and Ozempic.

- Growth in subscriptions: Investors will want to see continued acceleration in the company’s subscriber base, which has been a major revenue driver.

- Gross margins and profitability trends: While revenue growth has been impressive, maintaining strong margins amid expansion efforts will be key.

- Compounded GLP-1 prescriptions: This has been a controversial yet lucrative segment for Hims, but with the FDA declaring the semaglutide shortage over, the long-term sustainability of these sales will be a key concern.

- New acquisitions: The company recently announced two strategic acquisitions, aimed at expanding its offerings and supply chain capabilities. Any commentary on these deals could provide insight into Hims’ future growth strategy.

Wegovy News and Its Impact on HIMS

The biggest overhang heading into earnings is the FDA’s decision to remove semaglutide from the drug shortage list on February 21, a move that could limit Hims' ability to compound and sell its version of the weight-loss drug. This development triggered a 25% sell-off in HIMS stock on Friday, as investors recalibrated expectations for the sustainability of its GLP-1-related revenue stream.

However, CEO Andrew Dudum was quick to note that Novo Nordisk, the maker of Wegovy and Ozempic, still expects supply constraints to persist. Additionally, compounded semaglutide formulations offer personalized dosing options that some patients may prefer over brand-name versions.

Some analysts believe that Hims' diversified platform and strong demand for weight-loss treatments will allow it to weather the impact of the FDA’s ruling. Others, such as Morgan Stanley, downgraded the stock to equal weight, citing concerns over valuation and near-term uncertainty.

What Are Analysts Saying?

The analyst community remains split on Hims heading into earnings.

- BTIG remains bullish, raising its price target from 35 to 85, citing continued demand in the weight-loss sector and a strengthening economy.

- Canaccord expects a strong quarter but believes investor focus will be on guidance and the future of compounded GLP-1 sales.

- Morgan Stanley downgraded the stock to "equal weight" with a 60 price target, arguing that while HIMS is an attractive growth story, the stock's recent surge raises near-term risks.

- Deutsche Bank, Needham, and Canaccord all remain positive, with expectations that operating momentum can continue despite regulatory headwinds.

Insider Selling and Market Sentiment

Adding to the uncertainty, CEO Andrew Dudum recently sold 175,661 shares worth over $10 million in a Form 4 filing with the SEC. While insider sales are not necessarily bearish, large disposals of stock ahead of a major event can sometimes signal caution.

Shares of HIMS have surged from $23 in mid-January to a high of $72 before pulling back sharply to around $49. This type of price action suggests that traders were aggressively taking profits ahead of earnings, possibly expecting near-term volatility.

Trading Implications and What to Watch Post-Earnings

HIMS stock has been extremely volatile leading up to earnings, and traders will be watching a few key elements post-report.

1. Forward guidance: With compounding semaglutide becoming more complicated post-FDA ruling, will Hims provide a clear roadmap for future revenue streams?

2. Earnings reaction: A strong beat and raise could lead to a relief rally, while any conservative guidance or signs of slowing growth could push shares lower.

3. Sector impact: Given Hims' role in telehealth and weight-loss treatments, this report could have ripple effects for competitors like LifeMD and broader telehealth stocks.

4. Options and IV crush: Hims' implied volatility is elevated ahead of earnings, meaning options traders could see a significant drop in IV post-results.

Final Thoughts: A High-Risk, High-Reward Setup

Hims & Hers Health is set to deliver explosive revenue and earnings growth, but with the FDA’s recent ruling and insider selling, sentiment has become more cautious. The stock’s massive year-to-date gains, coupled with a sharp pullback on Friday, suggest that traders were taking profits ahead of a highly uncertain event.

If the company delivers strong numbers and provides reassuring guidance, the stock could stabilize and resume its upward trajectory. However, any conservative outlook or signs of slowing demand for compounded GLP-1 treatments could lead to further downside.

This earnings report will be a defining moment for Hims & Hers Health, setting the stage for its next big move.