Telehealth company Hims & Hers Health (NYSE:HIMS) announced better-than-expected revenue in Q4 CY2024, with sales up 95.1% year on year to $481.1 million. On top of that, next quarter’s revenue guidance ($530 million at the midpoint) was surprisingly good and 4.6% above what analysts were expecting. Its GAAP profit of $0.11 per share was in line with analysts’ consensus estimates.
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Hims & Hers Health (HIMS) Q4 CY2024 Highlights:
- Revenue: $481.1 million vs analyst estimates of $470.8 million (95.1% year-on-year growth, 2.2% beat)
- EPS (GAAP): $0.11 vs analyst estimates of $0.11 (in line)
- Adjusted EBITDA: $54.12 million vs analyst estimates of $54.66 million (11.2% margin, 1% miss)
- Management’s revenue guidance for the upcoming financial year 2025 is $2.35 billion at the midpoint, beating analyst estimates by 12.4% and implying 59.2% growth (vs 67.5% in FY2024)
- EBITDA guidance for the upcoming financial year 2025 is $295 million at the midpoint, above analyst estimates of $272.5 million
- Operating Margin: 3.9%, up from -0.2% in the same quarter last year
- Free Cash Flow Margin: 12.4%, up from 4.4% in the same quarter last year
- Customers: 2.23 million, up from 2.05 million in the previous quarter
- Market Capitalization: $10.77 billion
“2024 was a fantastic year at Hims and Hers as we continue to build a platform that leverages personalization and technology unlike any traditional healthcare system,” said Andrew Dudum, co-founder and CEO.
Company Overview
Founded in 2017 to make healthcare more accessible, Hims & Hers Health (NYSE:HIMS) provides online healthcare services and personalized treatments for a range of conditions, including hair loss, sexual health, mental health, and skincare.
Healthcare Technology for Patients
The consumer-focused healthcare technology industry aims to improve accessibility, affordability, and convenience for patients seeking healthcare services. These companies typically leverage digital platforms to offer services such as prescription discounts, telemedicine consultations, and wellness products. Their business models often benefit from recurring revenues via subscription plans or marketplace commissions. The primary advantages of this sector include the scalability of digital platforms and growing consumer demand for on-demand healthcare. However, challenges arise from heavy reliance on marketing to acquire and retain customers, evolving regulatory backdrops, and continuing to convince newer cohorts (especially older individuals who tend to have more healthcare needs) that healthcare can be accessed online. Looking ahead, the industry stands to gain from tailwinds such as increasing consumer comfort with telehealth, rising healthcare costs driving demand for cost-saving tools, and broader adoption of personalized, digital-first healthcare. Technological advancements, including AI-powered health assessments and seamless user experiences, are likely to further enhance growth prospects. Conversely, headwinds include heightened competition from large tech companies entering the healthcare space or large healthcare companies investing in digital technologies.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Hims & Hers Health’s 78% annualized revenue growth over the last five years was incredible. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful 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 67.4% over the last two years is below its five-year trend, but we still think the results were good and suggest demand was strong. 
We can better understand the company’s revenue dynamics by analyzing its number of customers, which reached 2.23 million in the latest quarter. Over the last two years, Hims & Hers Health’s customer base averaged 54.7% 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 reported magnificent year-on-year revenue growth of 95.1%, and its $481.1 million of revenue beat Wall Street’s estimates by 2.2%. Company management is currently guiding for a 90.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 42.2% over the next 12 months, a deceleration versus the last two years. Still, this projection is commendable and suggests the market is baking in 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 5% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.
On the plus side, Hims & Hers Health’s operating margin rose by 14.4 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 17.2 percentage points on a two-year basis. These data points are very encouraging and shows momentum is on its side.
This quarter, Hims & Hers Health generated an operating profit margin of 3.9%, up 4 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
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 Q4, Hims & Hers Health reported EPS at $0.11, up from $0.01 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Hims & Hers Health’s full-year EPS of $0.54 to grow 4.7%.
Key Takeaways from Hims & Hers Health’s Q4 Results
We were impressed by Hims & Hers Health’s optimistic full-year revenue and EBITDA guidance, which blew past analysts’ expectations. We were also glad this quarter's revenue beat Wall Street’s estimates. On the other hand, its customer additions and EBITDA slightly missed. Overall, we think this was still a solid quarter with some key areas of upside, but the worse-than-anticipated customer additions and EBITDA seem to be sending shares lower. We also note that expectations were high going into the print as the stock was up 104% year-to-date before the announcement. HIMS traded down 16% to $43.09 immediately after reporting.
Big picture, is Hims & Hers Health a buy here and now? We think that the latest quarter is only 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.
