Consider Hims & Hers (HIMS) as a compelling long-term investment, as the stock appears significantly undervalued relative to its rapid growth. The company is experiencing strong momentum, particularly in its "Hers" segment which is growing 100% year-over-year, and is showing a clear path to profitability with high gross margins. Current financial guidance is viewed as conservative and does not yet include the pending high-growth Eucalyptus acquisition, suggesting potential for a significant revenue beat. With a strong balance sheet and efficient marketing, the company is well-positioned to achieve its long-term revenue goal of $6.5 billion by 2030. Investors may find the current price an attractive entry point by looking past short-term market narratives.

Hims & Hers Health, Inc. (HIMS)

• Overall Sentiment: The speaker is extremely bullish on HIMS, referring to it as a long-term hold and describing the stock as "way undervalued" and "dirt, dirt cheap." He believes the market is misunderstanding the company and that its current negative sentiment is unwarranted.

• Financial Performance & Growth:

  • Revenue Growth: The company is still in a hyper-growth phase.
    • Full-year revenue grew 59% year-over-year.
    • The most recent quarterly revenue grew 28% year-over-year, even with the perceived negative impact from GLP-1 drugs.
  • Profitability: The company is showing strong progress towards profitability.
    • Adjusted EBITDA for the year was $318 million, representing a 14% margin.
    • Gross Margins are very high at 72%.
  • Subscriber Metrics: Customer growth and value are increasing.
    • Total subscribers are now over 2.5 million, an increase of 40,000 in the last quarter.
    • Average Revenue Per User (ARPU) has climbed to $83/month, up significantly from a previous $50/month.

• Business Strengths & Strategy:

  • "Hers" Segment: The "Hers" part of the business is the fastest-growing segment, expanding 100% year-over-year. This is driven by new products for anxiety, menopause, and GLP-1s.
  • Marketing Efficiency: The company is spending its marketing dollars more effectively.
    • The payback period for marketing expenses is now less than one year, which the speaker equates to a 100% return on investment annually.
    • This counters the old narrative that HIMS was "just a marketing company."
  • Vertical Integration: A key competitive advantage is that HIMS owns its entire value chain. This includes drug manufacturing, pharmacy services, prescriptions, and delivery, allowing it to control costs and the customer experience, unlike the fragmented traditional healthcare system.
  • Use of AI: The company is leveraging its database of 2.5 million customers to use AI for refining treatments and developing personalized medicine, which the speaker sees as the future of healthcare.
  • New Customer Funnels: The new "Labs" service is a low-cost way to attract customers. 70% of people who used the lab service were found to be eligible for a HIMS treatment plan, making it an effective top-of-funnel strategy.

• Guidance & Valuation:

  • Long-Term Guidance (2030): The company maintained its long-term revenue guidance of $6.5 billion by 2030, signaling confidence to long-term investors.
  • Short-Term Guidance (2026): Management guided for 15% to 24% revenue growth for the upcoming year. The speaker believes this is "conservative" and "sandbagged" (intentionally low).
  • Eucalyptus Acquisition: The official guidance does not include the pending acquisition of Eucalyptus, a company with $450 million in annual recurring revenue that is growing 100% per year. The speaker believes this means the actual growth will be much higher than guided.
  • Valuation: The speaker states the company has an enterprise value of roughly $3.5 billion against $300 million in adjusted EBITDA while growing rapidly, making it significantly undervalued in his opinion.

• Risks (As Dismissed by the Speaker):

  • GLP-1 Narrative: The market is incorrectly viewing HIMS as "just a GLP-1 company," when this is only a small fraction of the business.
  • Novo Nordisk Lawsuit: The speaker is not concerned, believing any potential legal fine is a "2031 issue" at the earliest due to the slow pace of the legal and appeals process. He views it as a "bad narrative" rather than a fundamental risk.
  • Market Sentiment: The speaker acknowledges that the entire high-growth sector is out of favor with the market, and HIMS's poor stock performance is in line with peers like SoFi (SOFI) and Pagaya (PGY), rather than being a company-specific problem.

Takeaways

• The core investment thesis is that HIMS is a high-growth, vertically integrated healthcare platform that is being unfairly punished by short-term market sentiment.
• The speaker suggests that the current stock price offers a compelling entry point for long-term investors, especially given that the 2030 growth targets remain intact.
• Key growth drivers to watch are the "Hers" segment, international expansion, and the integration of the Eucalyptus acquisition, which is expected to significantly boost revenue beyond the company's conservative guidance.
• The company's improving marketing efficiency and high gross margins suggest a clear path to significant future profitability and cash flow once growth spending moderates.
• Risks like the Novo Nordisk lawsuit and the GLP-1 narrative are viewed by the speaker as temporary noise that does not impact the long-term business fundamentals.