Hims & Hers: A Penny Saved is a Penny Lost?

Now, I reckon I’ve seen a good many fortunes rise and fall in my time, and this here tale of Hims & Hers Health (HIMS 1.39%) strikes me as a particularly curious specimen. They’ve had a run, mind you – a bit of a frolic in the sun, climbing a good 170% not long ago, and a solid 34% the year before. But as the fella says, what goes up must come down, and come down it has – a good seventy percent in the past year, and half its value just since the turn of the year. A right proper tumble, wouldn’t you say?

The trouble, as near as I can tell, started with these GLP-1 weight-loss concoctions. They tried their hand at a copycat of Wegovy, a pill for shedding pounds, and ran afoul of the authorities. The FDA Commissioner, a fellow named Marty Makary, threatened to come down on them like a ton of bricks, and Novo Nordisk, the folks who actually invented the thing, filed a lawsuit. Seems they were selling these compounded versions while the genuine article was in short supply, a bit of opportunism that backfired, wouldn’t you say? A fella can’t just go around copying other folks’ recipes, even if they are for slimming down.

Now, despite all this kerfuffle, they reported sales climbing a respectable 28% to $617.8 million last quarter. That’s toward the high end of what they predicted, which is something, I suppose. And their revenue from the U.S. rose 17% to $554.1 million, while international revenue went from a mere pittance to $63.7 million. Seems they’re trying to spread their wings, these folks.

They’re getting a bit more money out of each subscriber, too – up 11% to $83 a month. And they’ve got over 2.51 million subscribers now, with 1.6 million of ’em signing up for those personalized subscriptions. That’s a good many folks, though I reckon a good portion of ’em are just lookin’ for a quick fix. Still, it’s a tidy sum.

But here’s where things get a mite peculiar. Their gross margins are shrinking – down 500 basis points to 72%. They claim it’s due to expansion into international markets and these new offerings, but I suspect it’s a sign of things gettin’ a bit tighter. They did manage to cut marketing expenses, though, from 46% to 39% of revenue. A fella can’t help but wonder if they’re tryin’ to polish a tarnished penny.

They managed to bump up their adjusted EBITDA – that’s earnings before all the fancy accounting – by 23% to $66.3 million. But their earnings per share actually fell, from $0.11 to $0.08, though it was still better than what the so-called experts predicted. Numbers can be mighty deceivin’, I always say.

Lookin’ ahead, they’re predictin’ revenue between $2.7 billion and $2.9 billion in 2026, with adjusted EBITDA between $300 million and $375 million. That suggests their margins are gonna stay squeezed, especially as they expand overseas. For the first quarter, they’re expectin’ revenue between $600 million and $625 million, and adjusted EBITDA between $35 million and $55 million. It’s within expectations, they say, but they fell a bit short of what the analysts were hopin’ for. Seems nobody can predict the future, not even these fellas with their charts and graphs.

Should investors buy the dip?

Now, despite all this regulatory bother with these weight-loss drugs, they claim their overall business is still sound, and that their higher-margin offerings make up the bulk of their revenue. They’re also bettin’ on international markets to drive growth in the years to come, and they recently acquired a company called Eucalyptus to help ’em expand overseas. Seems they’re tryin’ to find new pastures, these folks.

After this tumble, the stock trades at a forward price-to-earnings ratio of around 14 times, based on what the analysts are predictin’ for 2026. There’s a risk their weight-loss business could take a hit, but the stock does look a bit washed out at this point. I reckon a fella could take a small, speculative position at these levels, given their opportunity with new offerings and international expansion. But I’d advise caution, mind you. The market’s a fickle beast, and fortunes can change on a dime. A penny saved is a penny earned, but a penny lost is a lesson learned. And sometimes, the best investment is the one you don’t make.

2026-02-27 13:52

Should investors buy the dip?

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