Hims & Hers Stock Plunges Despite 49% Revenue Surge

What happened

Hims & Hers shares fell almost 12% after third-quarter sales rose 49% to $890.3 million, slightly below projections. Subscribers declined 100,000 from the prior quarter to 2.8 million. The company lowered its full-year sales and adjusted EBITDA expectations, while planning broader access to weight-loss drugs and more UK and Germany marketing.

Confirmed

Global impact / market context

The lower outlook points to slower expected sales and profit growth, while fewer subscribers quarter over quarter raise questions about demand. Expanding access to weight-loss drugs and overseas marketing could bring in customers, but those efforts may add costs before they generate enough sales to improve profits.

Analyst inference

The share decline occurred despite a smaller loss than analysts expected, suggesting investors weighed future growth and profitability more heavily than that quarterly result. Sales growth remained strong year over year, but subscriber numbers fell from the prior quarter and gross margin, the share of sales left after direct costs, weakened.

Analyst inference

What to watch

1. Watch whether expanded access to Eli Lilly and Novo Nordisk weight-loss drugs reverses the subscriber decline; the article says the company plans to increase access. Confirmed
2. Track whether additional marketing in the UK and Germany lifts international sales enough to offset its cost and support the revised full-year sales outlook. Analyst inference
3. Compare fourth-quarter revenue and adjusted EBITDA with management’s stated ranges of $875 million to $895 million and $70 million to $90 million, respectively. Confirmed

Evidence

• gurufocus.com