Hook / Thesis
Hims & Hers (ticker: HIMS) is a telehealth platform that has moved beyond experiment stage into meaningful scale. The business now supports more than 2 million subscribers and reported sequential and year-over-year revenue acceleration through fiscal 2025 Q3. Crucially, the company is producing positive operating income and net income in the most recent quarter while still reinvesting aggressively; that combination creates a tactical opportunity after a sharp short-term pullback.
In short: the market is pricing a lot of execution risk into HIMS today. The Q3 results (filed 11/03/2025) show an expanding top line, positive operating cash flow, and modest GAAP profits that argue the company is converting scale into cash. That argues for a tactical long with defined risk management – entry in the low $30s, a stop below $28, and staged targets into the $40s and $50s as the story de-risks.
What Hims & Hers does and why it matters
Hims & Hers launched as a direct-pay telehealth platform in 2017 and today offers care across erectile dysfunction, hair loss, skin care, mental health, and weight loss. The platform bundles provider networks, electronic medical records, cloud pharmacy fulfillment, and personalization. It operates without taking insurance and transacts directly with customers, which gives it control over pricing, margins, and customer experience.
Why the market should care: two secular forces are working in HIMS' favor. First, consumer adoption of telehealth and direct-to-consumer care continues to grow, especially for recurring prescription and wellness products. Second, the rise of GLP-1s and medically supervised weight-loss programs has created a large addressable market that HIMS can serve through its digital platform and prescribing workflows. Scale in subscribers and pharmacy fulfillment is a strong competitive asset once invested.
Recent financials that support the thesis
- Q3 FY2025 (period 07/01/2025 - 09/30/2025; filing 11/03/2025): Revenues $598.98M, gross profit $442.06M (roughly 73.8% gross margin), operating income $11.81M, and net income $15.77M.
- Quarterly trend: Q1 FY2025 revenues $586.01M (filing 05/05/2025), Q2 FY2025 $544.83M (filing 08/04/2025), and Q3 FY2025 $598.98M (filing 11/03/2025) - the company re-accelerated after Q2 and is showing both sequential strength and large year-over-year gains (Q3 2024 revenue was $401.56M).
- Operating cash flow in Q3 FY2025 was positive at $148.72M, demonstrating that core operations are generating cash. That matters more than accounting profit for a subscription-commerce business that needs to fund inventories and fulfillment.
- Balance-sheet scale: as of the Q3 filing the company reported total assets of $2.233B and liabilities of $1.652B with equity of $581M - the balance sheet shows the company has the plumbing for a high-volume pharmacy and provider network at scale, but is also operating with material liabilities that require monitoring.
Valuation framing
The dataset does not explicitly list a market cap in the snapshot, so I derive an approximate market capitalization using the most recent diluted average shares reported in Q3 FY2025: 248,675,710 diluted shares. At the current price near $31.69 (intraday snapshot), that implies an approximate market cap of about $7.9 billion (248.7M * $31.69 ≈ $7.88B). Using Q3 revenue of $598.98M and annualizing that quarterly run rate (x4 ≈ $2.396B), the stock trades at roughly 3.3x revenue on a simple price-to-sales basis (market cap / run-rate revenue ≈ 7.88B / 2.396B ≈ 3.3x).
Is that cheap or expensive? For a profitable, fast-growing direct-to-consumer healthcare platform the multiple is within reason if growth sustains and margins continue to improve. The company achieved a positive operating income and net income in the most recent quarter; if those profits scale, the current multiple looks supportable. That said, the firm is also investing heavily (see cash-flow items below), which creates near-term execution and capital-allocation risk.
Cash flow & capital activity worth watching
- Q3 FY2025 net cash flow from operating activities was +$148.7M (positive).
- Q3 FY2025 net cash flow from investing activities was -$887.4M; the large outflow drove total net cash flow for the period to -$779.2M. This reflects aggressive reinvestment and/or M&A activity that is shrinking reported cash despite operating strength.
- Q2 FY2025 (filed 08/04/2025) showed a financing inflow of +$889.17M, indicating the company raised capital earlier in the year and then deployed it in Q3. That sequencing (raise then deploy) is logical but creates dilution/execution sensitivity if the investments do not produce expected returns.
Catalysts (2-5)
- Continued subscriber growth and ARPU expansion - quarterly revenue re-acceleration from Q2 to Q3 shows the platform can grow while improving monetization.
- GLP-1 / weight-loss program adoption - medical weight-loss is a high-dollar category; product expansion here can drive higher lifetime value per subscriber.
- Gross-margin leverage from scale in pharmacy and direct distribution - current gross margin in Q3 was high (~73.8%), and further efficiencies improve cash conversion.
- De-risking of recent investments - proof points (integration wins, accretive M&A results) would validate the large Q3 investing spend and remove a major overhang.
Trade plan (actionable)
My base case trade is a tactical long with a swing time horizon (weeks to a few months). This is sized for investors comfortable with volatility and a binary execution risk associated with recent investments.
| Trade element | Plan |
|---|---|
| Entry | Buy in the $31.00 - $34.00 range. (Current snapshot: $31.69) |
| Initial stop | $27.50 - tight stop for traders (approx. 12-13% below a $31.50 entry). Use $26.50 - $27.50 depending on risk tolerance. If you prefer more room, a 20% stop near $25 is acceptable but increases position-size complexity. |
| Targets (staged) |
|
| Position sizing | Keep allocation limited: 1-3% of portfolio for retail traders; institutional or larger investors should scale in and use smaller initial sizes given Q3 investing noise. |
Why this structure? The entry band uses the recent pullback as an opportunity while the stop protects against a deeper drawdown if investors punish the heavy investing cadence. Targets are staged to lock profits as the company proves integration and growth.
Risks and counterarguments
- Large investing outflows create execution risk. Q3 FY2025 investing cash flow was -$887.4M. Deploying that capital poorly would be dilutive to returns. Investors should watch the line items behind that outflow for acquisitions or capex and demand integration metrics.
- Dilution / capital markets risk. The financing inflow in Q2 FY2025 was +$889.17M (filing 08/04/2025). That raises the possibility of dilution if future needs persist. The market will penalize the equity if investments require repeated raises without clear payback.
- Competitive pressure on pricing for weight-loss therapies. The dataset includes a news item noting that a major incumbent (Novo Nordisk) cut GLP-1 prices (reported 11/23/2025). Price competition or aggressive discounting from large pharma could compress HIMS' margin opportunity in weight-loss categories.
- High short interest and volatility. Multiple news items list HIMS among highly shorted names. That creates two-sided risk: potential for short squeezes that spike the price, but also sizable downside if broader sentiment turns negative.
- Macro / consumer sensitivity. HIMS is a direct-pay business for many services; an economic slowdown could depress discretionary healthcare spending and subscriber growth.
Counterargument to my bullish stance
One legitimate bear case: management is expanding too quickly into capital-intensive areas and will not generate commensurate returns, forcing further dilution or margin erosion. The Q3 investing outflow of -$887M is large relative to operating cash flow and raises the risk that scale does not translate into profitable long-term growth. If the company can not show integration wins and improved ROIC within the next two quarters, the market could re-rate the stock toward lower multiples despite current profitability.
What to watch next (data points that would change my view)
- Sequential subscriber growth and ARPU in the next quarter (proof that recent investments lead to higher monetization).
- Details on the Q3 investing uses: one-time vs. recurring; M&A vs. capex; and expected payback timelines.
- Gross and operating margin trajectory: sustaining or expanding the ~74% gross margin and improving operating margin beyond the low-single-digit level will validate the multiple.
- Any additional financing activity or equity issuance would be a negative catalyst unless it funds clearly accretive deals.
Conclusion and stance
My stance: tactical long (swing trade) with explicit risk controls. HIMS' most recent quarter (filed 11/03/2025) shows the company has scale, improving unit economics, positive operating cash flow (+$148.7M in Q3), and small GAAP profits - a rare profile in consumer-health scale-ups. The valuation implied by diluted shares and current price (~$7.9B market cap; ~3.3x run-rate revenue) is reasonable provided growth and margin improvement continue and the large investing spend is demonstrably accretive.
I'll be constructive into $31 - $34 with an initial stop in the high-$20s and staged profit-taking into the $40s and $50s. If the company delivers integration proof points and continued revenue acceleration in the next two quarters, I'll upgrade the trade toward a longer-term position. If the next filings show disappointing returns on the Q3 investing outflow or additional dilutive financing, that will flip my view to neutral or negative.
Disclaimer: This write-up is a trade idea for informational purposes and not personalized investment advice. Manage position sizes and stops according to your risk tolerances.