Hims & Hers Health (NYSE:HIMS) Misses Q2 Revenue Estimates, Stock Drops 12%
Is now the time to buy Hims & Hers Health? Find out in our full research report.
Hims & Hers Health (HIMS) Q2 CY2025 Highlights:
Revenue: $544.8 million vs analyst estimates of $550.8 million (72.6% year-on-year growth, 1.1% miss)
EPS (GAAP): $0.17 vs analyst estimates of $0.15 (13% beat)
Adjusted EBITDA: $82.24 million vs analyst estimates of $72.2 million (15.1% margin, 13.9% beat)
The company reconfirmed its revenue guidance for the full year of $2.35 billion at the midpoint
EBITDA guidance for the full year is $315 million at the midpoint, below analyst estimates of $319.4 million
Operating Margin: 4.9%, up from 3.5% in the same quarter last year
Free Cash Flow was -$69.43 million, down from $47.57 million in the same quarter last year
Customers: 2.44 million, up from 2.37 million in the previous quarter
Market Capitalization: $14 billion
'It's never been more clear that we are delivering exactly what millions of people have been waiting for: access to personalized, high-quality care that meets people where they are. From the momentum of our business to the results our customers are achieving, we are more confident than ever that our model is helping people optimize their health and realize the benefits of precision medicine,' said Andrew Dudum, co-founder and CEO.
Company Overview
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE:HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Revenue Growth
Examining a company's long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Hims & Hers Health grew its sales at an incredible 78.1% compounded annual growth rate. Its growth surpassed the average healthcare company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Hims & Hers Health's annualized revenue growth of 68.3% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.
We can better understand the company's revenue dynamics by analyzing its number of customers, which reached 2.44 million in the latest quarter. Over the last two years, Hims & Hers Health's customer base averaged 43.3% year-on-year growth. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company's products and services.
This quarter, Hims & Hers Health achieved a magnificent 72.6% year-on-year revenue growth rate, but its $544.8 million of revenue fell short of Wall Street's lofty estimates. Company management is currently guiding for a 44.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 28.5% over the next 12 months, a deceleration versus the last two years. Still, this projection is healthy and indicates the market sees success for its products and services.
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Operating Margin
Although Hims & Hers Health was profitable this quarter from an operational perspective, it's generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 1.7% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out.
On the plus side, Hims & Hers Health's operating margin rose by 43.9 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company's trajectory is intact as its margin has also increased by 13.6 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.
In Q2, Hims & Hers Health generated an operating margin profit margin of 4.9%, up 1.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Hims & Hers Health's full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it's at an inflection point.
In Q2, Hims & Hers Health reported EPS at $0.17, up from $0.06 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Hims & Hers Health's full-year EPS of $0.80 to grow 4.4%.
Key Takeaways from Hims & Hers Health's Q2 Results
We enjoyed seeing Hims & Hers Health beat analysts' EPS expectations this quarter. We were also happy its customer base narrowly outperformed Wall Street's estimates. On the other hand, its EBITDA guidance for next quarter missed and its revenue fell slightly short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 12% to $55.84 immediately after reporting.
Should you buy the stock or not? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free.
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