HIMS — Deck
Hims & Hers is a U.S. direct-to-consumer telehealth subscription company that acquires customers through heavy advertising and ships recurring prescription refills across sexual wellness, hair loss, skin, mental health, and weight loss.
Does gross margin stabilize at 72%+ or is the Wegovy pivot the leading edge of permanent compression?
- 800bps of damage already landed. FY25 gross margin fell to 74% from 82% in FY23 as compounded semaglutide went from accretive to dilutive. All of that happened before branded Wegovy hit the P&L.
- FY26 EBITDA guide sits below FY25 actual. The $300–375M midpoint ($337M) is only 6% above FY25's $318M despite ~18% revenue growth — the first guide in the public-company era where operating leverage flattens.
- Branded is a distribution fee, not a manufactured margin. The March 2026 pivot moves customers from $199/month compounded semaglutide — proprietary, 85%+ contribution — to $599/month branded Wegovy. Novo keeps the drug margin; HIMS takes a spread.
A compounded-GLP-1 rocket ride ended in three weeks of regulatory whiplash and a forced reinvention.
Before: From Q2 2024 through Q1 2025, compounded semaglutide at $199/month drove revenue from $1.48B to $2.35B and the stock from $13 to $73. Management pitched personalized dosing and vertically owned pharmacies as the moat; the FDA shortage exemption was the legal oxygen.
Pivot: February 2026 stacked four shocks in three weeks — FDA forced withdrawal of a $49 oral semaglutide pill days after launch, the SEC opened a disclosure inquiry, Novo Nordisk filed a patent suit, and Q1 guide came in light. The stock hit a 52-week low of $13.74 on Feb 24.
Today: By March, HIMS flipped the Novo lawsuit into a distribution partnership for branded Wegovy at $599/month and announced a $1.15B deal for Australian telehealth operator Eucalyptus. The business is now a branded-drug distributor plus an international M&A binge, not a compounded-Rx machine.
Revenue tripled in three years; free cash flow collapsed 71% in one.
Operating cash flow of $300M looks healthy until you subtract $243M of pharmacy and peptide-facility capex, which leaves only $57M of real free cash. The $970M convertible raise funded $145M of M&A, $637M in an investment portfolio, and $72M of buybacks — net cash swung from -$290M to +$44M in twelve months. Quarterly growth decelerated every quarter in FY25 as compounded-GLP-1 unwound.
Andrew Dudum owns 7% of the economics and commands 88% of the votes; insiders sold $43M in 13 months with zero buys.
- Dual-class extreme. Class V shares carry 175 votes each and all sit in the founder's trusts. BlackRock and Vanguard hold 19% of the economics and 2.5% of the votes. If Class V ever converts, a dormant staggered-board provision automatically activates.
- One-directional insider flow. $43.2M of open-market sales in 13 months; zero open-market purchases by any insider. CFO Yemi Okupe sold $11.6M in two September 2025 days near $60 and has continued — 78,500 shares between April 6 and April 22 at $20–30.
- Turbulence at the operating top. The COO seat turned over twice in 2025 (Baird out May, Kabbani out November, Chi promoted). A $4.1M annual payment to Vouched — a vendor whose CEO is a former COO's spouse — is the one disclosed related-party item. The board has a Netflix ex-CFO, an ex-Teva CEO, and an ex-FDA Deputy Commissioner, but no conceivable shareholder vote goes against Dudum.
The chart ran 9× then gave back two-thirds — and has just rallied 29% in a month.
- Death cross fired Dec 8, 2025. The 50-day SMA crossed below the 200-day for the first time since August 2023; price at $29 sits 24% below the 200-day at $38.10. The prior golden cross in January 2024 kicked off the entire run to $73.
- Relief rally, not a trend change — yet. RSI swung from 15 in mid-February to 67 today, a 52-point reversal in two months, with MACD firmly positive. But every prior MACD spike above +1.5 in the past 18 months reversed sharply within weeks.
- Volatility is in a stressed regime. 30-day realized vol sits at 96%, above the 80th-percentile threshold of 92%. Five single-day moves above ±15% in the past 12 months. Above $38 invalidates the downtrend; below $20 opens a retest of the $14 February low.
Lean cautious ahead of May 11 — the FY26 guide already prints margin compression the bull case has to explain away.
- For. Strip compounded GLP-1 out entirely and HIMS is still a $1.5B+ profitable DTC pharmacy with 23.7% ROE, 6–7 month marketing payback stable for four years, and personalized SKUs at 70% of US revenue driving ARPU to $83.
- For. Eucalyptus ($1.15B, closes mid-2026) drops $450M+ of international run-rate into the model across Australia, UK, Germany, Japan, and Canada — funded from the balance sheet and not in sell-side consensus.
- Against. FY26 Adj EBITDA midpoint ($337M) is only 6% above FY25 on 18% revenue growth — the first year of flattening operating leverage, with FCF already at just 18% of EBITDA.
- Against. 800bps of gross-margin compression landed before branded Wegovy hit the mix, and the CFO keeps selling into the rebound. The filings describe growth; the insider tape describes exit.
Watchlist to re-rate: Q1 FY26 gross margin on May 11; FY26 capex and FCF trajectory; whether CFO Okupe files a new 10b5-1 after the print and at what price.