Hims & Hers proclaimed an "exciting period of growth". Why did the stock collapse?

The US operator of telemedicine platform and online pharmacy Hims & Hers Health, which sells analogs of popular weight-loss drugs, reported earnings above forecasts and a jump in sales in the second quarter. Executives called the coming period "exciting" and promised entry into new markets. However, the stock collapsed in price - Wall Street was alarmed by the weak guidance for the current quarter.

"We believe we are entering an exciting period of growth that will see us enter new, meaningful areas of business, bringing treatment to millions of people in need," Hims & Hers CEO Andrew Dudum told investors after the release of its quarterly report. In it, the company recorded a 73% jump in sales to $545 million, and reported earnings above market expectations of $0.17 per share versus consensus of $0.15.

Nevertheless, Hims & Hers quotes collapsed 13.5% in New York. Although it left its full-year guidance in place, its guidance for the current quarter disappointed Wall Street, writes MarketWatch. The company said it expects third-quarter revenue in a range of $570 million to $590 million, averaging $3 million below the FactSet consensus forecast of $583 million. The company also said adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter will be in the range of $60 million to $70 million, with analysts on average expecting $77.1 million, reports CNBC, citing StreetAccount data.

Hims & Hers specializes in selling anxiety medications, hair loss remedies and sexual health products. The company also sells analogs of weight-loss injections in the U.S., using a legal loophole that allows pharmacies to customize them if the original drug is not available in that form.

Until the spring of 2025, Hims & Hers made money selling copies of best-selling semaglutide-based diabetes and overweight medications (Ozempic, Wegovy). The business was legal, as US pharmacies are allowed to produce generics of patent-protected drugs as long as they are in short supply. However, in February 2025, US authorities removed semaglutide from the list of shortage drugs, after which mass production of analogs became illegal.

In June, Novo Nordisk announced that it was ending its partnership with Hims & Hers - less than two months after it began. The Danish weight loss drug maker accused Hims & Hers of "failing to comply with the law prohibiting the mass sale of drugs under the guise of 'personalization'." In addition, Novo claimed that information distributed by the platform about generic Wegovy "jeopardizes patient safety." Last week, the pharma giant warned of weak sales growth for Wegovy and Ozempic in the second half of the year precisely because of widespread distribution of pharmacy copies. The company complained that the practice of making copies of drugs in pharmacies continues and several manufacturers still sell generic versions of semaglutide.

In early July, Freedom Broker recommended buying back shares of Hims & Hers on a drawdown - after they crashed 35% in one day due to a conflict with Novo Nordisk. Since then, they've risen 51% and are up 1.5 times since January 2025.

A week before the second-quarter report, shares of Hims & Hers were ranked third in Investor's Business Daily 50 Top Growth Stocks and leading among 38 securities in the Medical Services industry group.

According to FactSet, the consensus rating for Hims & Hers is now Neutral (Hold). Analysts on average expect the stock price to fall 26% to $47 by the close of the main trading session on August 4.

This article was AI-translated and verified by a human editor