In the updated material (UPD 02/26), we’ll discuss Hims & Hers Health (ticker: HIMS). The company specializes in telemedicine and direct-to-consumer (D2C) prescription sales, as well as medical services covering a wide range of needs, from dermatology to mental health and weight loss programs. Today, we’ll break down why the stock has dropped more than 34% between February 20 and 26, review the much-anticipated Q4 earnings report, assess future prospects and risks, forecast and, of course, try to answer the key question: Is HIMS a Good Stock to Buy Now?
Drop Part 1: What Happened to HIMS on February 21, 2025?
On February 21, 2025, HIMS stock dropped sharply by 25%, closing at around $49. This decline was particularly striking after its strong rally in the previous months. The company’s market capitalization fell to $10.7 billion.
3 Reasons Why HIMS Stock Crashed
1. FDA Announces End of Semaglutide Shortage
On February 21, the U.S. Food and Drug Administration (FDA) announced that the semaglutide shortage—the active ingredient in Novo Nordisk’s blockbuster drugs Wegovy and Ozempic—is officially over.
Previously, Hims & Hers (HIMS) had been able to prescribe compounded versions of semaglutide as an alternative when brand-name drugs were in short supply. But now that the shortage is over, the FDA plans to tighten its oversight and take action against companies that continue to offer compounded versions in ways that violate regulations.
2. Restrictions on Compounded Medications
Under U.S. law, pharmacies are allowed to compound (custom-make) medications when an FDA-approved drug is in shortage. But now that Wegovy and Ozempic are no longer classified as “shortage drugs,” HIMS will likely lose its ability to offer cheaper compounded alternatives (~$200 per month vs. $1,000 for branded versions without insurance).
Investors are worried that this regulatory shift could directly impact HIMS’ revenue, given that GLP-1 weight loss drugs have been a key growth driver.
3. Profit-Taking & Market Volatility
HIMS stock skyrocketed over 400% in the past year, making it a prime target for profit-taking. Many investors likely decided to lock in their gains following the negative FDA news.
Additionally, telemedicine remains a highly competitive and heavily regulated sector. Any change in government policy, insurance reimbursement structures, or regulatory frameworks can significantly impact stock prices, leading to heightened volatility.
Drop Part 2: HIMS Q4 Earnings Report
On February 24, 2025, Hims & Hers Health released its financial results for Q4, reporting strong revenue growth and improvements in key metrics. Revenue came in at $481.1 million, up 95.1% year-over-year, beating analyst expectations of $470.8 million.
Sounds solid, right? So why did the stock drop more than 15% after the report (on February 25)? There’s no definitive answer, but there are some theories. The most likely explanation is investor concerns over recent FDA decisions regarding semaglutide, which could have a significant impact on future financial performance.
However, the 2025 outlook exceeded expectations. The company projects $2.35 billion in revenue, representing a 59.2% year-over-year increase.
Growth Potential: HIMS stock forecast 2025
Despite current regulatory challenges, Hims & Hers Health still has a compelling growth story.
Subscription-Based Model. HIMS relies on a direct-to-consumer (D2C) business with monthly subscriptions. Beyond weight loss drugs, the company offers services for mental health, dermatology, and reproductive health.
In-House Manufacturing Capabilities. In February 2025, HIMS announced the acquisition of a U.S.-based peptide manufacturing facility, giving it more control over production and quality assurance.
Expansion of Diagnostic Services. HIMS recently acquired Trybe Labs, a company specializing in at-home blood testing. This could enhance customer experience and create new revenue streams, as patients will be able to conduct comprehensive health assessments without leaving home.
Potential Risks & Challenges: HIMS stock forecast 2025
Despite its strong growth trajectory, Hims & Hers Health faces several significant risks and challenges that could impact its future performance.
Regulatory Crackdown. The biggest short-term risk is further FDA action against compounded GLP-1 drugs. If HIMS fails to adjust its strategy, part of its revenue could be at risk.
Fierce Competition. The telemedicine space is highly competitive, with major players like Teladoc, Amazon Clinic, and Google Health investing heavily in digital healthcare solutions.
Reliance on “Hot” Trends. The GLP-1 sector is red-hot, but what happens if safety concerns arise or insurance coverage changes? Any shift in sentiment could impact demand.
Is HIMS a Good Stock to Buy?
Given the recent major drop (over 36%), I wanted to wait a few days before updating this article and avoid rushing to any conclusions. In my view, if you believe HIMS can navigate the new regulatory challenges, this pullback presents an attractive entry point. A price around $40 looks quite appealing.
On the other hand, the stock has been highly volatile all week. It wasn’t until February 26 that HIMS managed to bounce off the lows, but the rebound was unconvincing. Early on, the stock was up 7-10% ($43-$44), yet by the end of the trading session, it closed with only 5% gain ($41,89).
Personally, I plan to watch the stock for a few more days. If the decline halts and we see at least modest growth of 1-3%, I’d be inclined to give it a “Probably BUY” (Is HIMS a Good Stock to Buy?) rating. However, if it dips another couple of percent, that would suggest it hasn’t found its bottom yet. You’ll also likely want to read about Nvidia (NVDA), Reddit (RDDT), Palantir (PLTR).
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This article is for informational purposes only and does not constitute financial advice. The content reflects the author’s opinion and should not be interpreted as an investment recommendation.
