Numbers

The Numbers

Hims & Hers is a direct-to-consumer telehealth subscription business that has compounded revenue at roughly 63% per year for three years while pivoting from GAAP losses to mid-single-digit net margins. But the FY2025 print hides a sharp intra-year slowdown: quarterly YoY growth decelerated from +111% in Q1 to +28% in Q4, gross margin fell from 82% to 74%, and the balance sheet swung from essentially debt-free to carrying $973M of convertible notes. At an EV/EBITDA of roughly 46x on TTM numbers, the single metric most likely to rerate or derate this stock is gross-margin stability over the next two quarters — everything else (growth, unit economics, valuation) keys off whether the compounded-GLP-1 drag is structural or transitional.

Snapshot

Shares outstanding of 219.6M against today's $29.01 close gives a ~$6.4B market cap; adding the $973M of convertible debt and netting $929M of cash and investments puts enterprise value near $6.4B, about 2.7× TTM revenue and 46× TTM EBITDA of roughly $178M.

Is this a healthy, well-run business?

A standard quality scorecard anchors on the three things that actually matter at this stage: does it earn a return on capital, can it pay its bills, and are reported earnings turning into cash.

HIMS generates a 23.7% ROE and 13.9% ROIC on a newly enlarged capital base — both high for a consumer services business. Cash conversion is the standout: operating cash flow of $300M came in at 2.3× GAAP net income, meaning the reported 5.5% net margin understates the true cash-generation of the model. The watch-list item is leverage: debt-to-equity jumped from 0.02 in FY2024 to 1.80 in FY2025 after the $970M convertible raise.

Revenue & earnings power

Revenue has gone from $872M → $1.48B → $2.35B in three years — a 2.7× cumulative lift. Operating income flipped from a $29M loss to a $106M profit without revenue mix appearing particularly lucrative; the operating-leverage story is real. But the margin chart flags the other half: gross margin gave back 800bps as FY25 progressed, and operating margin barely inched up despite revenue nearly doubling.

Quarterly direction — the deceleration question

Revenue dollars are still climbing, but the growth-rate chart is unambiguous: YoY growth went from 111% in Q1 FY25 to 28% in Q4 FY25 — a four-quarter deceleration. Q2 FY25 revenue actually dipped sequentially versus Q1, the first down quarter since IPO, reflecting the compounded-semaglutide unwind.

Cash generation — are the earnings real?

Operating cash flow ran $300M in FY25 against $128M of GAAP net income — a 234% conversion ratio. The main reason is stock-based compensation: $135M of SBC is added back as non-cash, so "cash earnings" are inflated by paying employees with equity that dilutes shareholders elsewhere. SBC as a share of revenue is declining (7.6% → 5.8%), which is the right direction, but in dollar terms it doubled in two years. Adjust net income for SBC and the real economic margin is closer to break-even, not the reported 5.5%.

Capital allocation & balance sheet shift

The right-hand chart tells the FY2025 story cleanly: HIMS raised $970M in convertible notes, spent $637M buying investments, $145M on a business acquisition (primarily the Wholesome / compounding infrastructure bolt-on), and $72M buying back stock — all funded by the debt raise plus $300M of operating cash. Net debt swung from -$290M (net cash) in FY24 to +$44M in FY25. The company now carries more leverage than it has at any point since IPO, but still holds $929M of liquidity to deploy.

Valuation — where it trades vs its own history

The stock peaked at $72.98 intraday on Feb 19, 2025 and has since retraced roughly 60% to $29. The fall was not a single event — it unwound over 14 months as three things happened in sequence: the FDA resolved the GLP-1 shortage (cutting off compounded semaglutide sales), gross margin compressed, and Q4 growth decelerated to 28%. At 2.7× sales today versus 3.6× at the FY2024 close, valuation has de-rated meaningfully but is still above the 2.1× multiple of FY2023 (when the business was unprofitable).

Peer comparison

Of the four public telehealth / direct-to-consumer health peers, HIMS is the only one profitable on a GAAP basis and the only one with a positive gross margin comparable to a software business. TDOC has similar revenue scale but is burning $200M a year; LFMD is profitable but a tenth the size; AMWL and WW are structurally challenged. The premium multiple HIMS commands versus peers is justified by unit economics; the question is what's the right multiple for a business whose growth rate just fell from 100%-plus to sub-30%.

Fair value scenario

The wide spread between bear ($17) and bull ($44) reflects the underlying binary: if compounded-GLP-1 revenue is a permanent drag, FY26 growth compresses below 20% and the multiple goes with it. If the core sexual-wellness / hair / mental-health verticals keep compounding and international launches land (mgmt called out a $1B+ opportunity on the Q3 call), the current multiple is defensible.

What the numbers say

The numbers confirm that HIMS is a genuinely profitable telehealth business with industry-best gross margins, a $2.3B revenue base, and a cash-generative model that converts more than 100% of GAAP earnings into operating cash flow. They contradict the bullish narrative that growth is durable at the pace of 2024 — the quarterly trajectory is a clean four-quarter deceleration and the margin compression is not yet priced as structural. What to watch in Q1 and Q2 FY2026: gross margin stability (a print above 72% would relieve pressure; below 70% would confirm the bear case), net-add trajectory ex-GLP-1, and whether the $929M on the balance sheet is deployed into return-generating acquisitions or sits as negative-carry treasuries against 0.25% convertible coupons.