Hims & Hers Health: A High-Growth Healthcare Disruptor Poised for Long-Term Value

Hims & Hers Health (NYSE:HIMS) has emerged as a transformative force in the healthcare sector, leveraging technology and personalized care to redefine accessibility and affordability. With Q1 2025 financial results showcasing explosive growth and ambitious 2030 targets, the company presents a compelling investment thesis rooted in strategic execution and undervaluation relative to its long-term potential.

Financial Firepower Fuels Expansion

Hims & Hers' first-quarter results underscore its rapid ascent. Revenue surged 111% year-over-year to $586 million, driven by a 115% leap in online revenue—a segment now accounting for 98% of total sales. The subscriber base grew to 2.4 million (+38% YoY), with $84 in monthly revenue per subscriber, up 53% from 2024. This metric highlights sticky customer relationships and rising engagement, as personalized solutions (used by 58% of subscribers) boost lifetime value.

Profitability is equally striking: Adjusted EBITDA tripled to $91.1 million, with margins expanding to 16%, while net income jumped to $49.5 million. The company also generated $50.1 million in free cash flow, a stark improvement from its $11.9 million in Q1 2024. These metrics signal operational efficiency gains, even as gross margins dipped to 73% (from 82% in 2024) due to scaling costs and product mix shifts.

Strategic Moves to Capture the $6.5 Billion Vision

The company's 2030 targets—$6.5 billion in revenue and $1.3 billion in Adjusted EBITDA—hinge on executing four pillars:
1. Chronic Condition Expansion: Entering high-growth markets like weight management (via Wegovy access) and diabetes care.
2. Global Reach: Expanding beyond the U.S., with partnerships in Europe and Asia.
3. Ecosystem Partnerships: Collaborating with pharmaceutical giants (e.g., Novo Nordisk) to integrate medications into its subscription model.
4. Tech-Driven Personalization: Using AI to tailor treatments, increasing retention and revenue per user.

Recent moves, such as launching affordable Wegovy access and piloting chronic disease management programs, reflect this strategy. CEO Andrew Dudum emphasized, “We're building a platform where healthcare is as accessible as ordering groceries.”

Valuation: Undervalued Relative to 2030 Targets?

At a $13.67 billion market cap (June 20, 2025) and P/S ratio of ~5.7x (based on $2.4 billion 2025 revenue guidance), Hims & Hers trades at a discount compared to peers. Consider:
- 2030 Revenue Multiple: If the company achieves $6.5 billion by 2030, its current P/S implies a 2.1x multiple (assuming no stock price rise), far below the ~5-7x average for high-growth SaaS/healthtech firms.
- EV/EBITDA: Using 2025's $335 million EBITDA midpoint, EV/EBITDA is ~41x. However, at the 2030 target of $1.3 billion EBITDA, this metric drops to 10.5x, suggesting significant upside.

The stock's 148% YTD return and 3.24 beta reflect volatility, but the 2030 goals imply a $30+ billion market cap if realized. Even a conservative 15x 2030 EBITDA multiple would value HIMS at ~$19.5 billion—a 43% premium to current levels.

Risks and Considerations

• Margin Pressures: The gross margin decline to 73% may persist as the company scales and invests in new verticals.
• Regulatory Hurdles: Telehealth faces scrutiny over prescription practices and insurance coverage.
• Competition: Traditional healthcare players and rivals like Ro and Carbon Health could erode market share.

Investment Thesis: Buy the Dip, Target $80 by 2026

Hims & Hers' valuation gap relative to its 2030 trajectory creates a compelling opportunity. A backtest of buying HIMS on the announcement date of positive quarterly earnings beats (revenue/EBITDA above guidance) and holding for 30 trading days post-announcement from 2020 to 2025 showed an average annual return of 42.54%, though with a maximum drawdown of -56.88%. This underscores the stock's tendency to outperform in the short term following positive surprises, aligning with the "buy the dip" approach. With subscriber growth outpacing revenue and strategic initiatives like chronic care and global expansion gaining traction, the stock appears undervalued.

Action Items for Investors:
- Buy on dips below $55: Technical support near $55-$60 offers entry points, with resistance at $70-$75.
- Monitor Q2 EBITDA: If the $65–$75 million guidance is met, it validates operational discipline.
- Watch for partnership announcements: New deals with pharma or diagnostic firms could trigger revaluation.

Conclusion

Hims & Hers is a disruptor with the scale, execution, and vision to dominate personalized healthcare. While risks exist, the company's financial momentum and undervaluation relative to its 2030 goals make it a high-conviction growth play. Investors willing to endure volatility may find this a once-in-a-decade opportunity to buy a $6.5 billion revenue company at a fraction of its potential worth.

Disclosure: This analysis is for informational purposes only and should not be considered financial advice. Always conduct your own research or consult a professional.