#What You Need to Know
Hims & Hers Health posted significant revenue growth in Q4, with a total of $481 million, exceeding analysts’ expectations. The company’s earnings per share were reported at $0.11, slightly above the forecast of $0.10. However, the gross margin of 77% fell short of the predicted 78.4%, leading to an 18% decline in stock performance during after-hours trading due to concerns about margins and regulatory changes.
However, recent regulatory developments have introduced challenges. The U.S. Food and Drug Administration (FDA) announced the resolution of the semaglutide shortage, the active ingredient in popular weight-loss drugs like Ozempic and Wegovy. This change requires compounding pharmacies to cease production of generic versions, affecting Hims & Hers' ability to offer these treatments.
In response, Hims & Hers plans to discontinue its compounded semaglutide offerings and is exploring alternative weight-loss solutions, including the introduction of generic GLP-1 drugs like liraglutide. Despite these setbacks, the company remains optimistic about its diversified product portfolio and continued growth in the telehealth sector.
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#Why This Is Important for Retail Investors
Stock Volatility: Despite strong revenue growth, Hims & Hers stock dropped significantly after earnings, highlighting the risks of investing in high-growth telehealth stocks.
Regulatory Impact: The FDA’s crackdown on compounded semaglutide affects the company’s weight-loss drug offerings, a key driver of recent growth. Retail investors should watch how Hims & Hers adapts.
Revenue Growth vs. Margin Pressure: While revenue nearly doubled, declining gross margins signal rising costs, which could impact profitability and long-term stock performance.
Future Growth Potential: The company’s 2025 guidance exceeded expectations, suggesting confidence in continued subscriber growth and product expansion despite recent regulatory setbacks.
Sector Trends: Telehealth and weight-loss drugs remain high-interest areas, and how Hims & Hers navigates challenges could provide insight into broader market opportunities in digital health.
#Relevant ETFs
Some investors prefer to invest in stocks via an exchange-traded fund for ease and reduced risk. Some relevant ETFs include the following:
Global X Telemedicine & Digital Health ETF (EDOC) – Focuses on companies involved in telemedicine, digital health, and remote patient monitoring.
ARK Genomic Revolution ETF (ARKG) – Invests in biotech and health innovation, including companies with telehealth exposure.
iShares U.S. Healthcare Providers ETF (IHF) – Tracks healthcare providers, including telehealth and online prescription services.