**TLDR:** Buy HIMS - extremely undervalued growth machine that makes having ED cool.
# Business Overview
Hims & Hers is a leading health and wellness platform on a mission to help the world feel great through better health. As a founder-led telehealth company, it delivers personalized healthcare solutions through a direct-to-consumer model, providing access to medical consultations, prescription treatments, and over-the-counter health products across key categories such as sexual health, mental health, weight loss, and hair loss.
# Key Financial Metrics (as of 3/21/25):
* Price: $32.87
* Market Cap: $7.44 billion
* Shares: \~221 million
* FCF/Share: .93
* FCF Yield: 2.69%
* Share Based Comp Adjusted FCF/Share: .50
* Share Based Comp Adjusted FCF Yield: 1.44%
* Forward FCF/Share = 1.29
* FWD FCF Yield: 3.9
* FWD EV/Sales: 3.01
* Price/Sales: 5.03
* FWD Price/Sales: 3.16
# Potential Concerns: Addressed Below
* Ending of the semaglutide (GLP-1) shortage by FDA.
* Growth ex-GLP-1.
* No moat?
* Share dilution.
# Company Highlights:
* **Exceptional Growth:**
* **Revenue:** \+95% QoQ, +69% YoY
* **Free Cash Flow:** \+452% QoQ, +322% YoY (*Note: HIMS includes web & app development in FCF CapEx calculations*)
* **Highly Recurring Revenue:** Over 90% of revenue comes from subscriptions.
* **Scalability & Profitability:** Rapid revenue growth combined with operational efficiency is driving sustained profitability.
* **Strong Balance Sheet:** $300M+ in cash, zero long-term debt.
* **Capital-Light Model:** Enables greater operating leverage and margin expansion.
* **Explosive Subscriber Growth:** 2.2M+ subscribers, growing at 45% annually—4x increase from 12/2021 to 12/2024.
* **Personalization at Scale:** 6x increase in subscribers using personalized offerings in two years, now exceeding 55%.
* **Founder-Led Vision:** Leadership focused on long-term strategy and disciplined growth.
* **Strategic Acquisitions:** Expansion into hormone and peptide therapy, enhancing data-driven healthcare capabilities.
* **New Payment Flexibility:** Now accepting HSA for weight-loss treatments.
# 2024 Earnings Release Highlights:
https://preview.redd.it/kzczv60i1oqe1.png?width=637&format=png&auto=webp&s=c372f1d0d57ce7d8073d9e16519c8664e4628ce0
Hims & Hers continues to deliver **exceptional growth**, with revenue and profitability scaling rapidly.
* **Revenue Growth:**
* **+95% QoQ** in Q4 2024
* **+69% YoY** for full-year 2024
https://preview.redd.it/tz4vhdej1oqe1.png?width=1156&format=png&auto=webp&s=55b7e85bc1c4387b51414982dbd2e83ec6b4058a
Free cash flow is growing at an impressive rate.
(*Note: HIMS applies a conservative approach, including web and app development in FCF calculations, which may differ from DCF estimates in the valuation section.*)
https://preview.redd.it/gzgg9lgk1oqe1.png?width=996&format=png&auto=webp&s=e1e11b44501be93597eda003cfce5d3076c7ad12
**Subscriber Growth:** Surged to 2.2 million+ from 1.5 million at year-end 2023.
https://preview.redd.it/835ul9ol1oqe1.png?width=973&format=png&auto=webp&s=c3fbae9dc69cd54974f7346249995be602b8d4f4
**Strong Balance Sheet:** No long-term debt and a robust cash position, ensuring financial flexibility.
# Addressing the Impact of the Semaglutide Shortage Ending
On **February 21, 2025**, the FDA declared the semaglutide shortage over—a significant development for Hims & Hers, as it came just days before their earnings call. While the timing was unexpected, it ultimately worked in HIMS’ favor, allowing management to adjust guidance and directly address concerns on the call.
**What Was the Semaglutide Shortage, and Why Does It Matter?**
Pharmaceutical companies are incentivized through patent protection, which grants them exclusive rights to sell patented drugs and recoup the costs of years of research and development. For example, Novo Nordisk holds the patent for Ozempic (semaglutide) until 2031, ensuring market exclusivity. However, if demand outpaces supply, the FDA can declare a shortage, permitting compounded versions of the drug to be sold by other providers, even while it remains under patent protection. This allows companies like HIMS to offer their own generic formulation of GLP-1, providing patients with greater access while addressing supply constraints.
With Novo Nordisk now claiming they can meet demand; the FDA has removed semaglutide from the shortage list. As a result, companies like HIMS can no longer sell compounded generics commercially.
However, there’s a key legal nuance:
* Semaglutide is commercially available in fixed doses (0.25mg, 0.5mg, 1mg, 1.7mg, and 2.4mg).
* If a specific prescribed dose is unavailable, it can still be compounded and sold.
Since HIMS specializes in personalized treatment plans, many of its GLP-1 prescriptions are in personalized, custom dosages, allowing it to continue offering compounded semaglutide where clinically necessary.
CEO Andrew Dudum has made it clear: while HIMS can no longer sell commercial dosages of GLP-1, it will continue providing personalized prescriptions where clinically necessary.
On the earnings call, CFO Yemi Okupe emphasized this point: ***“What we see in general in our platform is, as Andrew mentioned, many of the folks that are coming to our platform have come and have had struggles with GLP-1s in the past. That was the genesis behind one of the reasons behind why we very quickly looked to roll out the personalized dosages as well.****"*
He also noted that “a majority of individuals on the platform today are utilizing personalized dosages versus the commercially available dosages.”
**Example of HIMS GLP-1 Onboarding Regimen:** Note the customized dosages\*\*.\*\*
https://preview.redd.it/us2f3qls1oqe1.png?width=604&format=png&auto=webp&s=04cc45df6496f7af09aaa3d41c9fe77081842837
# The Financial Impact of GLP-1
Prior to Q3 2024, I estimated that GLP-1 revenue accounted for 10-15% of HIMS’ total revenue. The company has now confirmed $225 million in GLP-1 revenue for 2024, approximately 15% of total FY24 revenue.
It’s worth noting that HIMS’ rapid growth predates its GLP-1 offerings. While the weight loss segment certainly boosted recent momentum, HIMS was already a disruptive force in telehealth before entering this space.
Additionally, GLP-1 was primarily a revenue and subscriber driver in the short term with compressed margins due to initial investment costs. Economies of scale take time for new product lines, and HIMS’ ability to expand into adjacent categories strengthens its long-term growth potential.
**Gross Margin Compression from 82% to 79.45% YoY.** Expected per HIMS due to GLP-1.
https://preview.redd.it/uev7s8sv1oqe1.png?width=552&format=png&auto=webp&s=c4bc59ed9a5dfccd2c7cea498c132351bb751368
While GLP-1 hype has fueled recent stock movement, it was never central to my investment thesis. HIMS is well-positioned to adapt, already planning to:
* **Continue offering personalized GLP-1 dosages** where permissible.
* **Reintroduce commercial GLP-1** should another shortage arise.
* **Expand its weight loss portfolio**, emphasizing its **oral weight loss medications** (already generating **$100M+ in revenue** within seven months of launch).
* **Introduce liraglutide** as an alternative weight loss treatment in 2025.
Many customers who initially joined HIMS for GLP-1 are expected to transition to other offerings within its ecosystem.
# Debunking the “No Moat” Argument
I disagree with the notion that HIMS lacks a competitive moat…
# Brand & Marketing Moat
HIMS first caught my attention as an investment opportunity due to its standout marketing strategy. The company has executed on a marketing strategy that has successfully built a strong, trusted brand. Simply put, HIMS makes Erectile Dysfunction medicine “cool” rather than clinical or embarrassing.
Beyond marketing, HIMS holds a first-mover advantage in personalized healthcare and wellness. Its focus on:
* **Personalized treatments**
* **Combination medications**
* **Direct-to-consumer accessibility**
…makes it a unique player in the telehealth space.
# Convenience & Consumer Experience
The U.S. healthcare system is a nightmare for many—complicated, expensive, and frustrating. Long wait times, insurance headaches, and unclear pricing leave patients feeling powerless. HIMS provides an alternative with a consumer-first approach that eliminates these barriers.
* Accessibility – No waiting rooms. No insurance approvals. Just seamless, direct-to-consumer care.
* Discretion – Patients can access treatments privately and comfortably.
* Transparent Pricing – Consumers know exactly what they’re paying before they commit—critical in an era of high-deductible insurance plans.
Unlike traditional healthcare, where patients feel like passive participants, HIMS empowers consumers to take control of their health.
The out-of-pocket cost of care continues to rise, with more Americans opting for high-deductible plans. As co-pays and other expenses grow faster than inflation, affordability is an increasing concern. HIMS is well-positioned within this cash-pay segment, offering upfront pricing and a seamless experience.
From discreet online consultations to direct-to-door delivery, every step is designed for convenience. Customers can browse treatments, receive personalized recommendations, and have medications shipped—all from their phone or computer. This retail-like approach makes healthcare as simple as shopping online, removing the stigma and complexity that often deter people from seeking treatment.
Unlike traditional telehealth models that feel transactional and impersonal, HIMS fosters engagement. Rather than passively following doctor’s orders, users customize their care, select treatments, and interact with a brand that prioritizes their needs.
In a world where convenience, transparency, and trust drive consumer decisions, HIMS offers a modern, approachable, and tailored healthcare experience—a key differentiator fueling its growth and brand loyalty.
# Share Dilution: A Manageable Concern
HIMS has been diluting shares at about 8% per year, which isn’t ideal, but reasonable for a young, high-growth company. Importantly, free cash flow growth is rapidly outpacing share-based compensation, making dilution a short-term tool rather than a long-term crutch.
[Source: Qualtrim](https://preview.redd.it/gs1g69sz1oqe1.png?width=858&format=png&auto=webp&s=bbd85d1e0b100862e5900d7d616544d3c0d2c14f)
[Source: Qualtrim](https://preview.redd.it/a4jetk112oqe1.png?width=838&format=png&auto=webp&s=794186a27687540216913ae098d66024a4284234)
# 2025 Outlook:
https://preview.redd.it/g7tpgw242oqe1.png?width=981&format=png&auto=webp&s=2512ebd9e99316590d7c4134fe30f9507bce8592
# Growth Opportunities & Catalysts
* **Total Addressable Market (TAM)** → 100M+ Americans suffer from weight-related health issues.
* **New Categories** → HIMS plans to launch 1-2 major new categories annually, with low testosterone, menopause support, and peptides as key focus areas.
* **At-Home Lab Testing** → Expanding personalized, data-driven care. Integrated with MedMatch, HIMS' AI-driven treatment-matching service, at-home lab testing enhances targeted care by leveraging health data for personalized recommendations. This approach expands product opportunities, boosts cross-selling, and deepens consumer engagement.
* **Subscription Growth** → CEO Andrew Dudum aims for 10M subscribers, a realistic target based on historical trends.On the earnings call, Dudum noted: ***"I think 10 million subs on the platform to me feels really quite in reach. And I think, frankly, pretty straightforward from a growth standpoint if you look at historical growth over the last five to six years. My optimistic hope and personally ambition would be to try to achieve this in the next five to six years."***
Additionally, average revenue per subscriber is becoming an increasingly important metric: ***"While the addition of subscribers remains the primary component of our growth, monthly online average revenue per subscriber is becoming a more meaningful contributor as well. Monthly online average revenue per subscriber increased 38% year-over-year to $73 in the fourth quarter."***
This is a positive long-term trend, though the recent spike was undoubtedly influenced by higher-priced GLP-1 sales.
[Source: Qualtrim](https://preview.redd.it/689lrlqc2oqe1.png?width=1456&format=png&auto=webp&s=53e2ef0e32bf3061e65ef8c5dcc520a33fe9943a)
# Risks & Challenges
* **Regulatory Risk** → Changes in compounding regulations could impact business.
* **GLP-1 Competition** → Commercial semaglutide providers are working hard to limit access to compounded GLP-1. In addition, a Wegovy direct-to-consumer option was recently released but is twice the cost of HIMS GLP-1.
* **Execution Risk** → The recent FDA ruling on GLP-1 has put HIMS under increased scrutiny. Fortunately, the decision came before earnings, allowing the company to adjust its guidance and address concerns directly. Despite this, HIMS maintained a strong outlook, reflecting confidence in its execution of weight-loss products. While I’ve never viewed HIMS as purely a GLP-1 investment, its ability to deliver on personalized GLP-1 offerings and transition to alternative weight-loss solutions will be critical in the coming quarters.
# Valuation:
Keep in mind that all of my calculations are estimates, intended to provide general guidelines for my personal decision-making.
# Multiple Valuation: Price/Sales
During the Q4 2024 earnings call, HIMS CEO Andrew Dudum reiterated confidence in the company’s long-term growth trajectory, stating that the goal of reaching 10 million subscribers was well within reach: **"I think 10 million subs on the platform to me feels really quite in reach. And I think, frankly, pretty straightforward from a growth standpoint if you look at historical growth over the last five to six years. My optimistic hope and personally ambition would be to try to achieve this in the next five to six years."**
With this target in mind, let’s assess a potential share price through the lens of the Price-to-Sales ratio, using Dudum’s stated goal alongside Monthly Average Revenue Per Subscriber (ARPU).
In Q4 2024, HIMS reported a Monthly ARPU of $73. However, this figure was temporarily elevated by GLP-1 prescriptions. A more balanced estimate comes from the full-year 2024 average, which stood at $63 per subscriber per month. We’ll use this more conservative metric for our valuation.
https://preview.redd.it/zdm1kbwj2oqe1.png?width=370&format=png&auto=webp&s=f3923e95d8bedf34b3836b81ac5250bd6acf01ed
**Bullish/CEO scenario: By 2031, with 10 million subscribers generating $63 in monthly revenue per user:**
***Implied 2031 Price Range:*** *$102.62 - $205.25. Average: $153.94*
***Implied Upside:*** *212% - 524%. Average: 368%*
***Implied CAGR:*** *21% - 36%. Average: 29%*
***Entry Price for 3x Upside (\~200% Gain):*** *\~$51.00*
https://preview.redd.it/l1mno4yl2oqe1.png?width=925&format=png&auto=webp&s=a3c5605e6f477291b86fcd40c2ab8b4bd4d910b3
**Conservative scenario: By 2031, with 6 million subscribers generating $63 in monthly revenue per user:**
***Implied 2031 Price Range:*** *$61.57 - $123.15. Average: $92.36*
***Implied Upside:*** *87% - 275%. Average: 181%*
***Implied CAGR:*** *11% - 25%. Average: 18%*
***Entry Price for 3x Upside (\~200% Gain):*** *\~$30.00*
https://preview.redd.it/zrhyxz2n2oqe1.png?width=923&format=png&auto=webp&s=17815471cd27b5c78b274e9f78fb5a58bb0fcd45
**If we assume a bullish, yet reasonable Price-to-Sales ratio of 7.5…**
https://preview.redd.it/8wadv16o2oqe1.png?width=649&format=png&auto=webp&s=44b09bda9a76786338d0e11a60d7686223bbc91c
**Of note:** HIMS currently boasts over 2.2 million subscribers, growing at an annual rate of 45%. The company has successfully scaled its subscriber base 4x from December 2021 to December 2024.
# Discounted Cash Flow
**At 35% Free Cash Flow Growth Rate, Terminal 3%.**
*Reflects we are undervalued at current price. 20% Margin of Safety is BUY at $86.69*
https://preview.redd.it/8c0n0sgp2oqe1.png?width=1089&format=png&auto=webp&s=dad1a954d2df3cef13374f9a171a2d7532ec3bee
**At 30% Free Cash Flow Growth Rate, Terminal 3%**
*Reflects we are undervalued at current price. 20% Margin of Safety is BUY at $63.76*
**At 25% Free Cash Flow Growth Rate, Terminal 3%**
*Reflects we are undervalued at current price. 20% Margin of Safety is BUY at $46.64*
**At 35% Decelerating to 15% Free Cash Flow Growth Rate, Terminal 3%**
*Reflects we are undervalued at current price. 20% Margin of Safety is BUY at $51.37*
https://preview.redd.it/dixinhmr2oqe1.png?width=1299&format=png&auto=webp&s=2bee9985e843377cd2a31a415d32ddc8a704d8ee
# Determination:
HIMS is a fast-growing, yet volatile company that I believe remains significantly undervalued. I first invested after its initial quarter of profitability, starting at $12 and averaging up to $15.89 before Q4 earnings. Following the post-earnings dip, I added shares in the mid-$30s, bringing my cost basis to $27.10.
Despite market concerns over GLP-1, I see these fears as overblown. My long-term conviction remains intact, and I continue to believe in 10x+ potential over the next decade.
Currently, HIMS is at my target portfolio weighting, but I’d consider adding more if the stock remains in the low-$30s to high-$20s. Based on a 20% margin of safety using a 25% free cash flow growth rate discounted at 10%, I view $46.64 and below as an attractive entry point. An entry in the low-$30s aligns with the more cautious 6 million subscriber scenario.
HIMS isn’t just a GLP-1 stock—it’s a disruptive, category-defining healthcare brand. The business continues to scale, expand, and differentiate itself, making it a compelling long-term investment opportunity.
# Position:
**Doubling down this week if we remain in mid-30s.**
https://preview.redd.it/gcqmptdn6oqe1.png?width=420&format=png&auto=webp&s=3d82ca9738d9e9e82db87fa6c89a1f2c6fc3027d