HIMS Stock Drops 20% After Strong Q4 Earnings: Regulatory Risks Loom Over GLP-1 Growth

Hims & Hers Health (HIMS) reported a strong fourth-quarter performance, surpassing expectations on revenue and earnings per share (EPS). The company posted Q4 EPS of $0.11, slightly ahead of analyst estimates of $0.10, while revenue came in at $481.1 million, surpassing the consensus estimate of $470.3 million. This represented an impressive 95% year-over-year (YoY) growth in revenue, demonstrating the strength of the company’s business model. Despite the strong numbers, shares fell nearly 20% in after-hours trading, likely due to the recent broader market pullback in high-beta stocks and concerns over regulatory risks surrounding its weight-loss drug offerings.

Key Metrics and Financial Highlights

Hims & Hers saw substantial growth across various key metrics in Q4. Total subscribers increased to 2.2 million, reflecting a 45% YoY growth rate. The company’s adjusted EBITDA came in at $54.1 million, in line with expectations of $54.3 million, marking a significant improvement from $20.6 million in Q4 2023. Gross margin, however, declined slightly to 77% from 83% a year ago, likely due to increased costs associated with expanding its product lines.

In terms of user engagement, average order value surged to $168, a 63% increase from the prior year and ahead of the $157.50 estimate. Net orders reached 2.81 million, a 22% YoY increase, though slightly below the consensus estimate of 2.90 million. While operating expenses jumped 72% YoY to $350.9 million, this reflects the company’s investment in infrastructure and marketing to drive long-term growth.

Guidance Exceeds Expectations

Hims & Hers provided robust guidance for both Q1 and full-year 2025. The company expects Q1 revenue in the range of $520 million to $540 million, well above the analyst consensus of $497.05 million. Adjusted EBITDA for the quarter is projected between $55 million and $65 million, also above the consensus estimate of $58.97 million.

For full-year 2025, Hims & Hers forecasts revenue between $2.3 billion and $2.4 billion, far exceeding the consensus estimate of $2.09 billion. Adjusted EBITDA guidance was set in the range of $270 million to $320 million, also well above the market expectation of $258.89 million. Notably, the company projects weight-loss revenue of at least $725 million for the year, signaling strong demand for its GLP-1 offerings despite looming regulatory headwinds.

The Role of GLP-1 and Regulatory Risks

Hims & Hers has gained significant traction with its GLP-1 weight-loss offerings, which contributed meaningfully to revenue growth in 2024. The company has been a major player in the compounding of semaglutide, the active ingredient in Novo Nordisk’s Ozempic and Wegovy. However, the recent decision by the FDA to remove semaglutide from its drug shortage list presents a challenge, as it means compounders will no longer be able to produce unauthorized versions of the medication.

While this presents a potential headwind, Hims & Hers has emphasized that it remains committed to regulatory compliance. The company plans to pivot its weight-loss offerings towards other formulations, including liraglutide, and develop new personalized solutions that will sustain growth in this segment. CEO Andrew Dudum also pointed out that Novo Nordisk itself has acknowledged supply constraints, which could keep demand for Hims & Hers’ alternatives high in the near term.

Business Strategy and Upcoming Plans

Beyond weight-loss treatments, Hims & Hers continues to expand its platform into other health verticals. The company recently acquired a provider of at-home whole-body lab testing, enabling it to offer a wider range of diagnostic services. This acquisition will allow the company to test for critical biomarkers related to heart health, hormones, liver function, thyroid health, and prostate health. By integrating lab testing, the company aims to provide even more personalized treatment plans, including customized medication, supplements, and lifestyle recommendations.

The company is also expanding its infrastructure, with increased investments in pharmacy automation and sterile compounding capabilities. This will support not only weight-loss treatments but also potential expansion into new specialties such as menopausal support and low testosterone treatment. Additionally, Hims & Hers is leveraging artificial intelligence to enhance patient care, including AI-driven coaching and virtual health assistants that can help customers make more informed health decisions.

Stock Volatility and Market Reaction

Despite the strong earnings report, Hims & Hers stock has been under significant pressure. Shares had rallied from $28 in mid-January to a high of $73 last week before pulling back to $50 ahead of the earnings release. The stock’s sharp decline in after-hours trading reflects a mix of profit-taking, high valuation concerns, and regulatory uncertainty surrounding its weight-loss business.

With a float of 178 million shares and a short interest of approximately 32%, Hims & Hers remains one of the more volatile names in the market. The 20% post-earnings drop is not surprising given the stock’s 440% rally over the past year. Looking ahead, $40 sets up as a key technical level to watch, as it could serve as a support zone for long-term investors looking to buy the dip.

Conclusion

Hims & Hers delivered an impressive Q4 report, showcasing strong growth in revenue, subscriber count, and profitability. The company’s guidance for 2025 suggests continued momentum, with revenue and adjusted EBITDA projections significantly exceeding analyst expectations. While concerns around the regulatory environment for GLP-1 drugs weighed on the stock, the company’s diversified business model and expansion into new healthcare verticals should help sustain long-term growth.

Given the stock’s high short interest and significant past gains, volatility is expected to remain high. However, if the company continues to execute on its growth initiatives, it could remain a compelling name in the digital health space for long-term investors.