Hims & Hers shares plunge 28% on concerns over weight loss business, margins

Core Viewpoint - Hims & Hers Health experienced a significant drop in share price following disappointing fourth-quarter results, particularly concerning gross margin and future weight loss business prospects [1][2]. Financial Performance - The company reported $481 million in revenue for the fourth quarter, a 95% increase from $246.6 million in the same period last year [2]. - Net income rose to $26.01 million, or 11 cents per share, compared to $1.25 million, or 1 cent per share, a year earlier [2]. - Gross margin was reported at 77%, falling short of analysts' expectations of 78.4% [2]. Weight Loss Business Insights - Hims & Hers began prescribing compounded semaglutide, a key ingredient in GLP-1 weight loss medications, but plans to discontinue this offering after the first quarter due to the resolution of supply shortages [4][5]. - The GLP-1 offering generated over $225 million in revenue for the company in 2024 [5]. - Future weight loss offerings will focus on oral medications and the injectable medication liraglutide, which is set to be introduced this year [6]. Analyst Reactions - Morgan Stanley analysts maintained an equal weight rating on the stock, expressing surprise at the company's 2025 revenue guidance of $2.3 billion to $2.4 billion, with expectations of at least $725 million from weight loss offerings [7][8]. - Bank of America analysts noted potential execution risks in transitioning patients to other weight loss products and reiterated an underperform rating, suggesting limited upside to 2025 revenue guidance [9]. - Citi analysts described the revenue guidance as "aspirational," indicating a need for significant acceleration in the use of other weight loss products, while raising their price target on the stock to $27 from $25 [10].