Stock Prices of Hims & Hers Decrease. Could This Be a Chance to Invest or Should Investors Flee the Market?
Hims & Hers Reports Q2 Earnings and Outlines International Expansion Strategy
Hims & Hers Health, the digital health company, has released its Q2 earnings report, showcasing impressive growth and outlining its plans for international expansion.
In Q2, the company's revenue surged by 73% year-over-year, reaching $544.8 million. Marketing expenses, which accounted for 40% of revenue (down from 46% a year ago), increased by 50% to nearly $218 million. Despite this, adjusted EBITDA surged to $82.2 million, a 109% increase from the same period last year.
The company's growth is not limited to the US market. Hims & Hers plans to expand into international markets, starting with Canada in 2023 and Europe through its acquisition of Zava. The company aims to become a global health giant, leveraging its direct customer relationships, which are particularly advantageous in new markets.
The strong growth is evident in the company's subscriber base, which grew by 31% to nearly 2.44 million. Customers using at least one personalized subscription increased by 89% to 1.5 million, indicating a sticky user base. The majority of Hims & Hers subscribers are on personalized treatment plans.
The company also announced its foray into hormonal health services, starting with lab testing. Hims & Hers expects to generate $725 million of revenue this year from weight loss drugs.
The stock, however, carries some risk due to its volatility and potential issues in the weight loss segment. It trades at a forward price-to-earnings (P/E) ratio of around 55 based on the analyst consensus for 2025. Despite this, its forward price/earnings-to-growth ratio (PEG) is under 0.6, suggesting it may be undervalued.
The stock trades at a multiple of 5.5 times 2025 analyst estimates from a price-to-sales perspective. Hims & Hers aims to reach $6.5 billion in revenue and $1.3 billion in adjusted EBITDA by 2030.
The company's gross margin decreased by 500 basis points, a factor that may concern investors. However, the company's adjusted EPS came in at $0.17, exceeding the $0.15 analyst consensus.
In terms of monthly online revenue per subscriber, it increased by 30% to $74 per month. Despite disruptions, Hims & Hers continues to see strong growth across different health categories.
In conclusion, Hims & Hers' Q2 earnings report highlights the company's impressive growth and its ambitious plans for international expansion. While the stock carries some risk, its PEG ratio suggests it may be undervalued, making it an interesting investment opportunity for some.
