Hims & Hers Health Shocks Investors With a Long-Term Forecast, but Is the Stock a Buy?

Core Viewpoint - Hims & Hers Health has demonstrated strong revenue growth and profitability, but faces skepticism from investors due to contracting gross margins and high marketing expenses [3][15]. Financial Performance - Q1 revenue reached $586 million, more than doubling year-over-year, exceeding the forecast of $530 million to $550 million [5][12]. - Monthly online revenue per subscriber increased by 53% to $84, with total subscribers rising by 38% to nearly 2.4 million [5][12]. - Adjusted EBITDA surged to $91 million from $32 million a year ago, with adjusted EPS at $0.20, surpassing the analyst consensus of $0.12 [11][12]. - Operating cash flow increased over fourfold to $109 million, while free cash flow rose to $50 million [11][12]. Growth Drivers - The company expects $725 million in revenue from weight loss drugs this year, with a robust 30% growth outside of GLP-1 weight loss drugs [7][8]. - Hims & Hers plans to expand its personalized treatment offerings, with 80% of dermatology patients now using personalized solutions [6][12]. - Long-term guidance includes projected revenue of $2.3 billion to $2.4 billion for 2025, and a forecast of at least $6.5 billion in revenue by 2030, indicating a CAGR of about 22% from 2026 to 2030 [12][13]. Marketing and Margins - Marketing expenses soared by 77% to $231 million, constituting 39% of revenue, down from 47% a year ago [10][12]. - Gross margin contracted by approximately 900 basis points to 73% from 82% a year ago, with expectations for a sequential increase in the next quarter [9][12]. Investor Sentiment - The stock has shown a year-to-date increase of around 108%, but is down about 27% from earlier highs [2]. - The company's performance has led to a divided sentiment among investors, with bulls focusing on revenue growth and bears concerned about margin contraction and marketing spend [14][15].