Shares of Hims & Hers Health Inc (NYSE:HIMS) tumbled 14.43% following the release of first-quarter results that did not meet analyst forecasts for either revenue or adjusted profitability.
The telehealth company reported revenue of $608 million for the quarter, a 3.8% increase from the year-ago period. That top-line figure came in below the Wall Street consensus of $617 million and BTIG’s near-term estimate of $620.1 million.
On the profit front, adjusted EBITDA fell to $44.3 million, representing a 51% decline compared with the same quarter a year earlier. That result also missed expectations, coming short of the $47 million consensus and BTIG’s $49.6 million estimate.
BTIG analysts noted a nuance in the company’s gross profit mix, observing that "the gross profit dollars of compounded products are likely much higher than brands, though this may be at least partly offset by dispensing Novo’s products through the HIMS pharmacies, and collecting a dispensing fee." The firm further cautioned that Hims & Hers will need "to aggressively manage sales and marketing costs, and operating expenses in order to be able to meet the revised EBITDA guidance."
The pronounced drop in adjusted EBITDA despite only modest revenue growth points to margin compression during the quarter. How the company balances cost control with continued revenue development will be a critical factor in whether it can hit its updated profitability targets.
Clear summary
Hims & Hers reported Q1 revenue of $608 million, up 3.8% year-over-year but below consensus and BTIG estimates. Adjusted EBITDA declined 51% to $44.3 million, missing analyst expectations. BTIG highlighted potential differences in gross profit between compounded products and brands and warned that the company must rein in sales and marketing and other operating expenses to meet revised EBITDA guidance.
Key points
- Stock reaction: Shares fell 14.43% on results that missed both revenue and adjusted EBITDA estimates.
- Financial performance: Q1 revenue was $608 million (up 3.8% YoY) versus a $617 million consensus and $620.1 million BTIG estimate; adjusted EBITDA was $44.3 million, down 51% YoY and below the $47 million consensus and BTIG’s $49.6 million forecast.
- Sectors impacted: The results and commentary have implications for the healthcare and telehealth segments, and for investors focused on consumer health and healthcare services stocks.
Risks and uncertainties
- Margin pressure: The steep adjusted EBITDA decline signals compression that could continue unless costs are controlled - a risk for profitability in the healthcare/telehealth sector.
- Expense management: BTIG explicitly flagged the need for aggressive management of sales and marketing and other operating expenses to meet revised EBITDA guidance - execution risk for management.
- Gross profit composition: Uncertainty remains around how differences in gross profit between compounded products and branded products, and the partial offset from dispensing Novo’s products through HIMS pharmacies via dispensing fees, will affect overall margins.
Investors and market participants will be watching whether Hims & Hers can tighten operating cost lines while sustaining revenue trends, as those dynamics will determine near-term margin recovery prospects.