Consider the key difference between healthcare companies that sell directly to consumers versus those dependent on government payers. Hims & Hers (HIMS) is highlighted as a potentially safer investment due to its direct-to-consumer model, with the recent price drop viewed as a potential buying opportunity. In contrast, CorMedix (CRMD) is presented as a high-risk, high-reward value play after its stock crashed over 30%. The company is considered "dirt cheap" but faces significant uncertainty from a Medicare pricing renegotiation for its key product in late 2026. For investors with a high risk tolerance, CRMD offers a value proposition, while HIMS provides a growth opportunity with a more resilient business model.

CorMedix Inc. (CRMD)

• The stock experienced a significant drop (down 33% on the day of the recording) after the company provided a disappointing outlook regarding its main product, DefendCalf.
• The core issue is the company's reliance on Medicare (CMS) for reimbursement. The pricing for DefendCalf is up for renegotiation in the second half of 2026.
• Management spooked the market by signaling that the price reduction will be larger than previously anticipated.
  • The company is guiding for $310-$320 million in revenue for the upcoming year (referred to as 2026 in the transcript), which was lower than the speaker's expectations.
• Despite the crash, the speaker notes the stock is now "dirt cheap" from a valuation perspective.
  • It is trading at less than 5 times its expected EBITDA (a measure of profitability) of $125 million for the upcoming year. This is considered a very low valuation for an innovative pharma company.
• A key positive is the Milita acquisition, which has diversified the company's product portfolio with other anti-infectious drugs, making it less dependent on a single product in the long term.
• The stock has a high short interest, which could be contributing to the sharp price decline.

Takeaways

• High-Risk, High-Reward Value Play: CRMD presents a classic value investment case where the stock is trading at a very low valuation. However, this comes with significant risk.
• The Government is the Biggest Risk Factor: The company's future revenue is heavily dependent on a pricing negotiation with a government body (CMS). A negative outcome could severely impact the stock, as demonstrated by the recent drop. The speaker uses the example of a company called Quantaflow, which "died" after CMS stopped reimbursements.
• Focus on 2026: The key catalyst for the stock will be the outcome of the DefendCalf price renegotiation in late 2026. Investors should monitor any news related to this process closely.
• Diversification is a Positive: The company's move to become a broader anti-infection pharma company through acquisitions is a long-term positive that could reduce its reliance on a single government-reimbursed product over time.

Hims & Hers Health, Inc. (HIMS)

• The speaker presents HIMS as a "genius" business model precisely because it avoids the government reimbursement risk that plagues companies like CorMedix.
• HIMS is a direct-to-consumer company. Its revenue comes from millions of individual customers (2.5 million) making their own purchasing decisions for products related to hair loss, erectile dysfunction, mental health, weight loss (GLPs), and more.
• This model is considered much "safer" because its fate isn't tied to a single political or regulatory decision. Revenue risk is spread across millions of customers.
• The stock was down on the day of the recording, which the speaker attributes to a bearish report from Bank of America and news of minor layoffs, which he views as a positive sign of the company staying lean.
• The stock has a high short interest of around 30%, which can lead to price volatility.

Takeaways

• A Safer Healthcare Model: The primary investment thesis for HIMS is its direct-to-consumer business model, which insulates it from the political and regulatory risks of government payers like Medicare and the ACA.
• Diversified Revenue Stream: Instead of relying on one big contract, HIMS's revenue is the sum of millions of small, individual transactions, making its top-line revenue more resilient and predictable.
• Potential Opportunity on Weakness: The speaker views the recent price drop, caused by a bank report and not a fundamental business problem, as a potential buying opportunity.
• Monitor Consumer Trends: The key risk for HIMS is not a single government decision but a broad shift in consumer spending or sentiment. Investors should focus on the company's ability to continue growing its subscriber base of 2.5 million users.

Oscar Health, Inc. (OSCR)

• Like CorMedix, Oscar Health's stock price is heavily influenced by government actions.
• OSCR operates in the Affordable Care Act (ACA) marketplace, and its stock trades based on the "whims of Congress."
• The key political risk is whether Congress will extend the ACA subsidies, which make insurance plans more affordable for its customers.
• The speaker notes that OSCR has already prepared for a scenario without the subsidies by raising its premiums by 28% for the upcoming year (referred to as 2026). They expect this to lead to slower growth (25%) as some customers may leave.
• While the company may not need the subsidy extension to survive, getting it would be a "cherry on the cake" and likely a major positive catalyst for the stock.

Takeaways

• A Politically Sensitive Investment: OSCR is a direct play on the political landscape surrounding the Affordable Care Act. Its stock price is likely to be volatile around key congressional votes or deadlines.
• Subsidy Extension is the Key Catalyst: The most important near-term factor for OSCR is the decision on extending ACA subsidies. A positive outcome would be a significant tailwind for the business and the stock.
• Business Fundamentals Appear Solid: The company has been proactive in raising prices to ensure profitability even without the subsidies, which shows operational strength. However, this may come at the cost of slower near-term growth.

General Investment Theme: Government Payers vs. Direct-to-Consumer

• The podcast highlights a crucial distinction for investors in the healthcare sector: understanding who the ultimate customer is.

Takeaways

• Government Payer Risk (e.g., CRMD, OSCR):
  • Companies that rely on reimbursement from government programs like Medicare (CMS) or funding from legislation like the ACA face what the speaker calls "binary risk."
  • A single regulatory decision or a failed vote in Congress can dramatically alter a company's revenue outlook overnight. This makes these stocks inherently more volatile and speculative.
• Direct-to-Consumer Advantage (e.g., HIMS):
  • Companies that sell directly to a large base of individual consumers have a more diversified and, in the speaker's view, safer revenue model.
  • Their success depends on marketing and product appeal to millions of people, not on a negotiation with a single, powerful government entity.
  • Investors seeking lower-risk exposure to the healthcare industry may prefer this business model.