Hims & Hers falls as weight loss treatment shift hurts revenues
Hims said it saw strong demand for its weight-loss offerings in the second quarter, but noted that a pivot toward personalized compounded GLP-1 treatments lowered the revenue it earned per order versus its previous compounded offering.
The new personalized offering is more costly to run, the company said. Compounded medications are less expensive than branded drugs like Novo Nordisk's (NOVOb.CO), opens new tab Wegovy, which Hims had offered under a now-terminated partnership with the Danish drugmaker.
Hims reported $190 million in GLP-1-related revenue during the quarter, down around $40 million from the preceding quarter.
Overall platform subscriptions rose 31% year-over-year.
Leerink Partners analysts flagged the GLP-1 revenue dip as expected. However, the market reaction was negative after the results, as investor expectations were elevated due to a surge in Hims' shares this year.
The company's stock has more than doubled so far this year, while Denmark-listed shares of Novo have fallen over 50%.
The brokerage called the softness in Hims' core business, which includes treatments for conditions related to sexual health, a negative surprise.
Hims & Hers reported a decline in its subscribers for its sexual health business, which sells generic drugs for erectile dysfunction, in the second quarter.
Canaccord Genuity echoed a near-term caution for the company, but remained constructive on the longer-term growth potential, citing strong year-over-year gains in newer specialties such as dermatology, weight management, and daily-use sexual health solutions.
Despite the stock's sharp post-earnings pullback, the brokerage called the move a potential buying opportunity.
Hims shares are priced at 95.85 times the company's estimated earnings for the next 12 months, a common benchmark for valuing stocks.
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