We came across a bullish thesis on Hims & Hers Health, Inc. (HIMS) on Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on HIMS. Hims & Hers Health, Inc. (HIMS)’s share was trading at $41.89 as of Feb 26th. HIMS’s trailing and forward P/E were 79.04 and 70.42 respectively according to Yahoo Finance.
A nurse in a telehealth platform talking with a patient on video call for consultation.
Hims is positioned for exponential free cash flow growth in the coming years, driven by its recent acquisitions and strategic evolution into a platform-as-a-service provider for legacy healthcare businesses. The company’s weight loss segment is expected to generate $750M in revenue for 2025, with a focus on oral and liraglutide-based solutions, ensuring its trajectory remains strong despite FDA shortages. Management’s execution has been nothing short of exceptional, demonstrating foresight and strategic agility that place Hims well ahead of its competition. While there is some uncertainty surrounding the 503A exception and potential legal battles over semaglutide, these risks are mitigated by management’s proven ability to navigate challenges and investors simply need to manage volatility rather than question the company’s long-term potential.
The company’s financial performance underscores its strength, with revenue up 95% YoY and 43% YoY excluding GLP-1 revenue. Hims achieved its 2025 revenue guidance a year early, reporting $1.5B in revenue for 2024, and is now guiding for $2.3-$2.4B in 2025. Trading at just 3.6x forward sales despite its remarkable growth, Hims appears severely undervalued. With a business of this caliber, led by an exceptional team, a valuation in the range of 10-20x sales would be far more appropriate.
Hims’ growth isn’t solely reliant on GLP-1, as the company’s other verticals, such as dermatology, continue to expand rapidly, with men’s and women’s dermatology revenue up 55% and 100% YoY, respectively. Management has guided for each specialty to exceed $100M in revenue in 2025, reinforcing the company’s broader healthcare ambitions. With subscriber growth surging from 1.42M to 2.2M YoY and 55% of users opting for personalized subscriptions, Hims is successfully converting customer pain points into sustainable revenue streams. Operational leverage is also becoming evident, with marketing and G&A expenses declining as a percentage of revenue while engagement remains robust.
The company’s ability to scale profitably is further highlighted by its shift towards organic traffic, reducing reliance on performance marketing. Management expects marketing leverage to improve by 1-3% per year, a tailwind for profitability. The weight loss segment’s rapid expansion led to a temporary dip in gross margins, but Hims’ decision to lower GLP-1 prices from $199 to $165 per month showcases its commitment to passing on economies of scale to customers. Gross margins are expected to rebound by Q2 2025, reaffirming management’s credibility.
Two recent acquisitions further illustrate Hims’ non-linear growth trajectory. The at-home full-body testing company opens doors for hormonal therapies, precision medicine, and broader preventative healthcare, while the acquisition of a California peptide facility positions Hims at the forefront of metabolic optimization, cognitive performance, and anti-aging therapies. These strategic moves reinforce the company’s vision of layering new verticals onto its existing infrastructure at marginal cost, creating immense long-term value. CEO Andrew Dudum’s focus on innovation and execution ensures that Hims remains a dominant force in the healthcare landscape, making the current valuation an attractive entry point with significant upside potential.
Hims & Hers Health, Inc. (HIMS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held HIMS at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of HIMS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HIMS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.