Hims & Hers Health shares plunged 18% in extended trading on Monday after investors looked past better-than-expected revenue and earnings and focused instead on the disappointing gross margin.
Here’s how the company did, compared to analysts’ consensus estimates from LSEG:
- Earnings per share: 11 cents vs. 10 cents expected
- Revenue: $481 million vs. $470 million expected
Revenue at the telehealth company increased 95% in the fourth quarter from $246.6 million during the same period last year, according to a release.
However, the company’s gross margin, or the profit left after accounting for the cost of goods sold, was 77%, while analysts polled by StreetAccount were expecting 78.4%.
It is the second big stock drop for Hims & Hers in a matter of days. The shares tumbled 26% on Friday after the U.S. Food and Drug Administration announced that the shortage of semaglutide injection products has been resolved.
In May, Hims & Hers started prescribing compounded semaglutide, the active ingredient in Novo Nordisk‘s blockbuster GLP-1 medications Ozempic and Wegovy. The company was a breakout star within the digital health sector in 2024, in part because of the success of its popular new weight loss offering.
The company said its GLP-1 offering generated more than $225 million in revenue in 2024. The stock climbed about 200% for the year.
Compounded drugs are custom-made alternatives to brand-name drugs designed to meet a specific patient’s needs, and compounders are allowed to produce them when brand-name treatments are in shortage. The FDA said Friday that it will start taking action against compounders for violations in the next 60 to 90 days.
Hims & Hers said on the earnings call that as a result, compounded semaglutide will likely not be offered on the platform after the first quarter.
“We will have to start notifying customers in the coming month or two that they will need to start looking for alternative options on the commercial dosing,” Hims & Hers CEO Andrew Dudum said on the call. “I would suspect, just being very direct, that a lot of those patients will try to go into the open market and try to secure a branded option in some form factor.”
Some patients might still be able to access compounded semaglutide if it is clinically necessary, the company added.
The company’s weight loss offerings will primarily be composed of its oral medications and the generic medication liraglutide, which it plans to introduce on its platform this year. Excluding contributions from compounded semaglutide, Hims & Hers said it expects it weight loss offering will generate at least $725 million in revenue in 2025.
Hims & Hers also offers treatments for skin care, mental health, sexual health and hair care.
Revenue for non-GLP-1 products increased 43% to $1.2 billion for the full year, “meeting our previous 2025 revenue target a year early,” Chief Financial Officer Yemi Okupe said in a release.
“The success we are experiencing is a direct reflection of our improving ability to democratize access to high quality, personalized care across each of our specialties,” Okupe said.
Net income climbed to $26.01 million, or 11 cents per share, from $1.25 million, or 1 cent per share, a year prior. The company reported adjusted earnings of $54.1 million, meeting analysts’ estimates, according to StreetAccount.
For the first quarter, Hims & Hers expects to report revenue of $520 million to $540 million, while analysts were expecting $497 million. Adjusted earnings will be between $55 million and $65 million for the period, the company said.
Hims & Hers will host its quarterly call with investors at 5:00 p.m. ET.
— CNBC’s Brandon Gomez contributed to this report.
