Hims & Hers Health ((HIMS – Free Report) ) has emerged as a disruptive force in telehealth, leveraging technology and personalization to address highly-personal health conditions while achieving scalable profitability.
HIMS (for short) is a significant player in the direct-to-consumer (DTC) telehealth industry, offering personalized healthcare solutions that encompass mental health, sexual wellness, dermatology, and chronic condition management — some of which have been stigmatized and kept people from seeking solutions.
With a robust subscription-based model and a focus on accessibility, the company has demonstrated notable growth and resilience in a competitive landscape.
HIMS’ vertically-integrated platform, combining telehealth consultations, diagnostics, and pharmacy services, positions it to capitalize on the $100+ billion telehealth market while expanding into adjacent healthcare sectors.
In my Zacks Healthcare Innovators portfolio, we took a chance on this young company in August under $15. And the herd caught on in the new year, giving us a surge above $60 where were able to harvest a gain of 220% during that volatility spike.
We are long again and targeting an eventual return in the next 12-18 months to at least $50.
2024 Was Great, 2025 Gets Better
On February 24, HIMS reported its Q4 and full-year results.
Revenue of $1.5 billion was up 69% year-over-year in 2024. Revenue excluding their GLP-1 offering increased 43% year-over-year to over $1.2 billion in 2024, meeting the company’s previous 2025 revenue target a year early.
Subscribers grew to 2.2 million, up 45% year-over-year in 2024.
Net income of $126 million and adjusted EBITDA of $177 million in 2024.
HIMS provided full year 2025 guidance, with revenue in the range of $2.3 billion to $2.4 billion — representing nearly 60% annual growth at the midpoint — and adjusted EBITDA in the range of $270 million to $320 million.
This outlook prompted analysts to boost their estimates in the past few weeks, moving HIMS to a Zacks #2 Rank as the Zacks EPS Consensus among eight analysts jumped 38% from 52-cents to 72-cents — representing explosive profit growth of 167%!
Let’s look through three windows on the fundamental outlook for HIMS.
1) Core Revenue Streams
The company’s primary revenue driver is its subscription-based model, accounting for over 90% of total revenue. As of Q4 2024, Hims & Hers reported 2.2 million subscribers, a 45% increase year-over-year. The average monthly online revenue per subscriber reached $73, reflecting 24% y-o-y growth.
The company operates five primary verticals:
Sexual Health: Treatments for erectile dysfunction and hair loss (30% of revenue)
Mental Health: Therapy and anxiety/depression medications (25%)
Dermatology: Acne and skincare solutions (20%)
Weight Management: Compounded GLP-1 therapies and metabolic health programs ($725M projected 2025 revenue). This has been the primary concern for investors with HIMS as the GLP-1 weight loss space is filled with volatility due to competition and falling margins.
Primary Care: Expanding into chronic condition management
Revenue grew 69% YoY to $1.5B in 2024, with subscriptions (82% retention at 3+ months) driving predictable cash flow. The 2025 guidance of $2.3B-$2.4B revenue reflects 59% growth at the midpoint, emphasizing margin expansion over GLP-1 volume.
2) Margin Profile & Unit Economics
Hims & Hers achieved profitability in 2024 with $126M net income and $177M adjusted EBITDA (11.8% margin). 2025 guidance suggests further margin improvement to 12.6% at the midpoint ($270M-$320M EBITDA), fueled by:
Operational leverage: 45% subscriber growth to 2.2M with 33% higher annual revenue per customer ($668 vs. $495)
Vertical integration: Recent acquisitions of Trybe Labs (diagnostics) and a peptide manufacturing facility reduce reliance on third-party suppliers
Automation: AI-powered MedMatch system analyzes 50M+ data points to optimize treatment plans, reducing provider workload
Customer acquisition costs rose to $929 in 2024 but remain justified by 85% retention rates and $198M free cash flow
Overall, Hims & Hers maintains strong financial metrics, with gross margins consistently between 80-83% and an adjusted EBITDA margin of 11-12%. The net profit margin improved to 4% in 2024, indicating efficient operational management. The company’s return on invested capital (ROIC) stands at an impressive 88.9%, and the payback period for customer acquisition costs is typically under a year, underscoring the effectiveness of its business model.
3) Unique Marketing Edge: Hip Channels & Creative Acquisition
Hims & Hers employs a sophisticated marketing strategy, heavily investing in digital advertising across platforms like Instagram and TikTok, which account for a significant portion of their marketing spend.
The company utilizes a proprietary customer segmentation algorithm with a 93% targeting accuracy, enhancing the efficiency of its marketing campaigns. Referral programs and personalized communication strategies further bolster customer engagement and retention.
HIMS deploys a $150M annual marketing budget across 3 strategies…
Micro-Influencers: 1,200+ nano/mid-tier creators driving 35% of conversions through relatable content
Brand Campaigns: Super Bowl ads and billboards normalize conversations about sensitive health issues
Algorithmic Targeting: Proprietary AI matches ad creative to high-intent audiences, achieving 6:1 ROAS (return on ad spend) which is very strong
This approach enables cost-effective scaling in a sector where traditional healthcare providers spend 2-3x more per acquisition.
Adapting to the Market
The global telehealth market is projected to reach over $250 billion by 2030, driven by increasing demand for virtual healthcare services. Hims & Hers’ focus on areas like mental health, sexual wellness, and chronic condition management positions it to capture a significant share of this expanding market.
The company’s foray into compounded GLP-1 weight-loss drugs, such as semaglutide, contributed to substantial revenue growth in 2024. However, recent FDA regulations ending the shortage status of these drugs have mandated the cessation of their compounded versions, posing a challenge to this revenue stream. Hims & Hers is adapting by focusing on personalized dosing models and diversifying its product portfolio to mitigate this impact.
Bottom line: Given these challenges, HIMS is still expecting explosive growth in their core businesses as they serve changing health-consumer preferences. The stock is a buy under $30 as it trades under 2.5x forward sales estimates.
