Although the company reported strong second-quarter results and raised its guidance, shares of Hims & Hers Health(NYSE: HIMS) slipped immediately after its earnings announcement. Nonetheless, the stock has been a strong performer this year, up over 80%.
Let's take a look at the telehealth company's most recent results, and decide whether it still makes sense to buy the stock on this recent pullback.
Surging revenue
Hims & Hers continues to see strong growth, with revenue surging 53% to $315.6 million. That was well above the company's guidance for $292 million to $297 million. Its net orders climbed 20% to 2.53 million, while average order value (AOV) climbed 27% to $121.
Excluding its new GLP-1 weight loss offering, which was launched during the middle of Q2, sales from existing offerings jumped 46% to over $300 million. Even before the introduction of the GLP-1 offering, the weight loss category had been seeing strong demand: In just seven months, the category gained more than 100,000 subscribers with a $100 million revenue run rate.
To help meet this increasing demand, the company will acquire a 503B outsourcing facility. This new facility will enhance its compounding capabilities and allow it to enter new specialties that require sterile compounded medications, such as such as hormonal therapy. It will also continue to invest in robotics and specialized software over the next few years.
Subscribers jumped 43% year over year to 1.86 million, with 155,000 net new subscribers. Personalized subscriptions soared 164% to 785,000 subscribers; these customers tend to stay with the service longer, and thus have longer lifetime values.
Hims & Hers also saw solid marketing leverage in the quarter, with marketing as a percentage of revenue falling to 46% from 52% a year ago. It does, however, plan to increase marketing in the second half of the year.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 270% year over year, from $10.6 million to $39.3 million. Net income flipped from a loss of $7.2 million (negative $0.03 per share) to a profit of $13.3 million ($0.06 per share). Operating cash flow surged 219% to $53.6 million from $16.8 million a year ago, while free cash flow came in at $47.6 million, a 377% increase.
Hims & Hers once again increased its full-year guidance. It now forecasts full-year revenue to be between $1.37 billion and $1.40 billion, up from a previous outlook of $1.20 billion to $1.23 billion. Its original guidance was for full-year revenue of between $1.17 billion and $1.20 billion.
The company also boosted adjusted EBITDA guidance, taking it to a range of $140 million to $155 million, up from its prior forecast of $120 million to $135 million. It had originally guided for adjusted EBITDA for 2024 to be between $100 million and $120 million.
For the third quarter, Hims & Her forecasts revenue to come in between $375 million and $380 million, representing a growth of 65% to 68%. It's looking for adjusted EBITDA of $35 million to $40 million.
Image source: Getty Images.
Is it too late to buy the stock?
Hims & Hers has been growing tremendously, and the recent launch of personalized GLP-1 solutions is set to enhance that growth even more, as demonstrated by its robust revenue guidance for Q3. This is a huge opportunity, and the company is just starting to scratch the surface.
Despite the stock's strong year-to-date performance, its valuation is very inexpensive at a forward price-to-earnings (P/E) ratio of 20.5 based on 2025 analyst estimates. For a company growing its revenue by over 50% with over 80% gross margin, that's a bargain.
HIMS PE Ratio (Forward 1y) data by YCharts.
One knock on Hims & Hers has been its a lack of a competitive moat, but its increased use of personalized compound formulations is creating one and helping to change that narrative. Offering personalized compound GLP-1 weight loss solutions at discounted prices was a bold move, but looks to be paying off. I would note, however, that its personalized GLP-1 offering is being done under the Food and Drug Administration's compound exemption, so any challenge to Hims & Hers based on that exception would be a risk. For its part, the company has said the clinical necessity of compounding personalized medications is well established.
Despite the potential risk, I would be a buyer of the stock, given its valuation and the opportunity ahead.
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Geoffrey Seiler has positions in Hims & Hers Health. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
