Shares of Hims & Hers Health fell 22% on Tuesday following the release of disappointing fourth-quarter results. The telehealth company’s report raised concerns over its weight loss business and gross margins.
Hims & Hers reported $481 million in revenue for the quarter, a 95% increase from $246.6 million a year earlier. Net income also grew, reaching $26.01 million, or 11 cents per share, compared to $1.25 million, or 1 cent per share, in the same period last year.
However, the company’s gross margin of 77% fell short of analysts’ expectations of 78.4%, according to StreetAccount. In a call with investors, Chief Financial Officer Yemi Okupe attributed this shortfall to the scaling of the company’s GLP-1 offering and strategic pricing changes.
Hims & Hers began offering compounded semaglutide, the active ingredient in Novo Nordisk’s GLP-1 weight loss drugs Ozempic and Wegovy, in May. These compounded drugs are typically used when brand-name treatments face shortages. However, the U.S. Food and Drug Administration announced on Friday that the shortage of semaglutide injection products has been resolved.
As a result, Hims & Hers announced that it will likely discontinue its compounded semaglutide offering after the first quarter, though some customers may still access personalized doses where clinically applicable. The GLP-1 product generated over $225 million in revenue for the company in 2024.
“We will begin notifying customers in the next month or two that they will need to seek alternative options for commercial dosing,” said CEO Andrew Dudum during the call.
Looking ahead, the company plans to focus its weight loss offerings on oral medications and the injectable liraglutide, which it intends to introduce this year.
Analysts at Morgan Stanley stated that the report presented a lot of information to process. They maintained an equal-weight rating on the stock but expressed surprise at the company’s 2025 revenue guidance. Hims & Hers expects to generate between $2.3 billion and $2.4 billion in revenue this year, with weight loss products contributing at least $725 million, excluding compounded semaglutide.
“We remain positive about the long-term opportunity, highlighting the company’s attractive platform and solid track record,” Morgan Stanley analysts said.
Bank of America analysts warned that while Hims & Hers might successfully transition customers to its other weight loss products, the company faces “significant execution risk” as the supply of brand-name GLP-1s increases. They also noted that competitors might shift marketing efforts back to other products, such as those for erectile dysfunction and hair loss, which could raise advertising costs for Hims & Hers. They maintained their underperform rating on the stock.
“Overall, we do not see upside to the 2025 revenue guidance and think the beat and raise story is likely over in the near term,” Bank of America analysts wrote.
Citi analysts, on the other hand, considered the company’s revenue guidance “aspirational,” requiring significant growth in its other weight loss offerings. Although they raised their price target for the stock to $27 from $25, they remained cautious and said they were waiting for more details on growth outside of GLP-1 products before becoming more positive on the stock.
