Hims & Hers (HIMS) Falls on a Double Miss
Shares of Hims & Hers (HIMS) dropped about 13.5%, trading near $19, after the company posted a surprise quarterly loss and narrowed its full-year sales outlook. The stock has fallen sharply over the past year and is now down almost 40% year to date. The decline continued the slide seen in after-hours trade.
The quarter missed on several fronts: revenue, subscriptions, and earnings. HIMS reported a loss of 14 cents per share against an expected profit of 6 cents per share. Revenue came in at $890.4 million, up 49% from a year ago, but about $3 million below analyst expectations - a small miss, still a miss. Net loss was $33 million, versus net income of $15.8 million a year earlier; consensus called for positive $13.9 million.
Subscriber count rose 13% to about 2.79 million. Revenue per average subscriber grew about 30% to $105, below what Wall Street wanted. The 49% third-quarter revenue growth marked the second straight quarter of acceleration. Domestic revenue rose 21% year over year, and international revenue jumped 321%.
Weak Guidance Across the Board
For the fourth quarter, HIMS expects revenue of $875 million to $895 million and EBITDA of $70 million to $90 million, an EBITDA margin of 8% to 10%. All of those came in under Street estimates. The company narrowed its full-year sales guidance to $3.13 billion to $3.15 billion, down from a prior $3.1 billion to $3.3 billion. Full-year EBITDA was also cut and narrowed to $257 million to $277 million, an EBITDA margin of 8% to 9%, which may signal some margin contraction compared with the quarterly numbers.
These moves wiped out the gains HIMS saw the prior week after announcing a deal with Eli Lilly (LLY) to sell Zepbound and Mounjaro on its platform. The "hot peptide summer" that many on the Street had been counting on did not materialize, and the regulatory path there remains uncertain. HIMS is investing heavily in AI and technology to drive the business over the long term.
The Options View
The surprise loss, the guidance cut, and light sales combined to hit the stock hard. On the surface the results were not great but not terrible - revenue is still growing, just a bit below expectations. I look for the stock to settle in near current levels, with $20 standing out as major support going back several quarters.
My example trade uses that $20 support: going out to December, selling a slightly out-of-the-money put spread. Earlier it was about 10% out of the money - selling the December 20/17 put spread brought in over a dollar right now. That is a strong return on risk, with defined risk, and shorter-term call spreads can be sold to hedge further if needed.
HIMS will likely keep growing, just not at the fast pace of before. The peptide pickup is not showing up, and the huge product benefits probably will not repeat going forward. The days of double-digit growth may be behind the company, but it should stay a solid business with steady growth ahead.
