Hims & Hers Health (HIMS)

Telehealth company Hims & Hers Health (NYSE:HIMS) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 111% year on year to $586 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $540 million was less impressive, coming in 4.3% below expectations. Its GAAP profit of $0.20 per share was 66.4% above analysts’ consensus estimates.

Company Overview

Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE:HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.

The consumer-focused healthcare technology industry aims to improve accessibility, affordability, and convenience for patients seeking healthcare services. These companies typically leverage digital platforms to offer services such as prescription discounts, telemedicine consultations, and wellness products. Their business models often benefit from recurring revenues via subscription plans or marketplace commissions. The primary advantages of this sector include the scalability of digital platforms and growing consumer demand for on-demand healthcare. However, challenges arise from heavy reliance on marketing to acquire and retain customers, evolving regulatory backdrops, and continuing to convince newer cohorts (especially older individuals who tend to have more healthcare needs) that healthcare can be accessed online. Looking ahead, the industry stands to gain from tailwinds such as increasing consumer comfort with telehealth, rising healthcare costs driving demand for cost-saving tools, and broader adoption of personalized, digital-first healthcare. Technological advancements, including AI-powered health assessments and seamless user experiences, are likely to further enhance growth prospects. Conversely, headwinds include heightened competition from large tech companies entering the healthcare space or large healthcare companies investing in digital technologies.

Hims & Hers Health competes with other telehealth providers like Teladoc Health (NYSE:TDOC) and Amwell (NYSE:AMWL), direct-to-consumer health companies such as Roman Health (parent company Ro is private), and traditional healthcare providers that have expanded into telehealth services.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $1.78 billion in revenue over the past 12 months, Hims & Hers Health is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive. On the bright side, Hims & Hers Health’s smaller revenue base allows it to grow faster if it can execute well.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Hims & Hers Health’s 79.1% annualized revenue growth over the last five years was incredible. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Hims & Hers Health’s annualized revenue growth of 70.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

Hims & Hers Health also reports its number of customers, which reached 2.37 million in the latest quarter. Over the last two years, Hims & Hers Health’s customer base averaged 48.6% year-on-year growth. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, Hims & Hers Health reported magnificent year-on-year revenue growth of 111%, and its $586 million of revenue beat Wall Street’s estimates by 8.3%. Company management is currently guiding for a 71.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 36.5% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and implies the market is forecasting success for its products and services.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Although Hims & Hers Health was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 2.7% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, Hims & Hers Health’s operating margin rose by 39.7 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 16.4 percentage points on a two-year basis. These data points are very encouraging and shows momentum is on its side.

This quarter, Hims & Hers Health generated an operating profit margin of 9.9%, up 6.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Hims & Hers Health’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

In Q1, Hims & Hers Health reported EPS at $0.20, up from $0.05 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Hims & Hers Health’s full-year EPS of $0.69 to grow 7.6%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Hims & Hers Health has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.7% over the last five years, slightly better than the broader healthcare sector.

Taking a step back, we can see that Hims & Hers Health’s margin expanded by 23.5 percentage points during that time. This is encouraging because it gives the company more optionality.

Hims & Hers Health’s free cash flow clocked in at $50.05 million in Q1, equivalent to a 8.5% margin. This result was good as its margin was 4.3 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Hims & Hers Health’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 9.3%, slightly better than typical healthcare business.

Companies with more cash than debt have lower bankruptcy risk.

Hims & Hers Health is a profitable, well-capitalized company with $322.7 million of cash and $63.38 million of debt on its balance sheet. This $259.3 million net cash position is 2.8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly Hims & Hers Health blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. On the other hand, its customer additions fell short of Wall Street’s estimates and its revenue guidance was softer than anticipated. Overall, we still think this was a decent quarter. The market seemed to be hoping for more, and the stock traded down 1.4% to $41.37 immediately after reporting.

Updated: June 24, 2025 at 12:00 AM EDT

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Hims & Hers Health.

Hims & Hers Health is an amazing business ranking highly on our list. First of all, the company’s revenue growth was exceptional over the last five years. And while its subscale operations give it fewer distribution channels than its larger rivals, its customer growth has been marvelous. Additionally, Hims & Hers Health’s rising cash profitability gives it more optionality.

Hims & Hers Health’s EV-to-EBITDA ratio based on the next 12 months is 31.8x. Looking across the spectrum of healthcare companies today, Hims & Hers Health’s fundamentals shine bright. We like the stock at this price.