Hook / Thesis
Hims & Hers (HIMS) is a telehealth-native consumer-health platform that has quietly moved from early-stage growth to stable, profitable quarters while continuing to scale revenue. The market has punished the stock from the 2024-2025 run, but the company is now printing stronger top-line numbers, positive operating cash flow and modest operating income. That combination - accelerating revenue plus cash generation - is exactly what can drive a re-rating in a growth stock that has structural optionality across sexual health, hair, skin, mental health and weight-loss offerings.
My trade idea: take a long position in the $33-36 range with a disciplined stop and staggered upside targets at $45, $60 and $80. This is a tactical to short-term position trade with a medium risk profile driven by a mismatch between improving fundamentals and current sentiment/price. The company can fund growth internally while monetizing an addressable consumer market through direct payments and subscription models.
What Hims & Hers Does and Why It Matters
Hims & Hers operates a telehealth platform that connects patients with providers and fulfills prescriptions and over-the-counter products through a cloud pharmacy and provider network. The platform services specialties where consumers prefer low-friction, direct-pay experiences - erectile dysfunction, hair loss, skin care, mental health and weight loss. The company's consumer-first model (more than 2 million subscribers reported historically) and proprietary fulfillment stack give it control over unit economics and customer experience, which matter more as competition intensifies and pricing pressure from incumbents appears.
Why the market should care: two fundamental drivers are in play. First, strong recurring revenue potential from subscriptions and repeat product purchases drives visible revenue streams. Second, the company is participating in the expanding weight-loss/GLP-1 conversation through its product mix and counseling, creating optional upside if it captures a larger share of that market. Put simply: durable consumer demand plus in-house fulfillment = leverage when scale improves.
Evidence from the Numbers
Use the most recent reported quarters as the baseline:
- Q3 FY2025 (period ended 09/30/2025, filing 11/03/2025): Revenues were $598.98M, gross profit $442.06M, operating income $11.81M and net income $15.77M. Operating cash flow was $148.72M. Total assets stood at $2.233B and equity at $580.98M.
- Q2 FY2025 (period ended 06/30/2025, filing 08/04/2025): Revenues $544.83M, gross profit $416.20M, operating income $26.72M, net income $42.51M. Q2 also showed sizable financing activity on the cash-flow line (net financing inflow of $889.17M), indicating corporate financing events across the period.
- Q1 FY2025 (period ended 03/31/2025, filing 05/05/2025): Revenues $586.01M, gross profit $430.69M, operating income $57.90M, net income $49.49M, and operating cash flow $109.09M.
Three-quarter context: revenue has been marching higher on a year-over-year basis (compare Q3 FY2025 revenue of $599M to Q3 FY2024 revenue of $401.6M). Annualizing the latest quarter gives a run-rate revenue of roughly $2.396B (4x Q3 revenue). Using the company's most-recent diluted average shares (Q3 FY2025 diluted average shares: 248,675,710) and the current trading level near $35.46, the implied market capitalization is approximately $8.8B. That puts the stock at roughly 3.7x run-rate revenue - a multiple that looks reasonable for a growth company landing positive operating cash flow and showing margin improvement, but still below many high-growth consumer-tech peers during peak multiple environments.
Valuation Framing
I estimate market cap ~ $8.8B (248.7M diluted shares x $35.46 price). Annualizing the most-recent quarter revenue gives a revenue run-rate of ~ $2.4B, which implies ~3.7x revenue. That multiple is attractive given the company is reporting positive operating income in recent quarters and strong operating cash flow ($148.7M in Q3 FY2025 and $109.1M in Q1 FY2025). The multiple also leaves room for re-rating if the market assigns a premium for profitable growth or if the company demonstrates sustainable unit economics across its largest categories.
Note: the stock traded in a wide band over the last 12 months, topping above $70 during the year and retreating into the $30s. A return to even a 5-6x revenue multiple would move the stock significantly higher if growth remains intact.
Catalysts
- Consistent top-line beats and margin improvement - continued quarters with revenue >$580M and positive operating income will reduce sentiment risk.
- Monetization upside from weight-loss/GLP-1-related offerings - any credible expansion into high-ticket weight-loss care or simplified access for patients could increase ARPU.
- Operating cash flow conversion and lower need for external financing - the company posted operating cash flow of $148.7M in Q3 FY2025; continued cash generation will reduce refinancing risk and support buybacks or reinvestment.
- Short-covering dynamics - the company has appeared on recent short-interest lists, which creates asymmetric upside if sentiment shifts or a catalyst surprises to the upside.
Trade Plan (Actionable)
- Trade direction: Long.
- Time horizon: Swing / Position (weeks to a few quarters).
- Entry: $33 - $36 (prefer building position incrementally across the band to average in). Current intra-day levels are ~ $35.46.
- Initial stop: $29 (roughly a 15% stop from entry edge; tight enough to respect recent support bands in the $30 area).
- Targets (staggered): $45 (near-term), $60 (medium-term), $80 (aggressive / re-rating). Take partial profits at each level and tighten stops as targets are hit.
- Risk level: Medium - high single-stock volatility but improving fundamentals reduce structural downside.
Risks and Counterarguments
At least four material risks deserve attention:
- Regulatory / compliance risk - telehealth and pharmacy fulfillment face ongoing regulatory scrutiny. Any new restrictions or compliance failures could impair the model or increase costs.
- Competition and pricing pressure - incumbents and vertically integrated players (including major pharmaceutical pricing moves) can pressure pricing. Recent headlines about major drugmakers changing GLP-1 pricing create uncertainty in the weight-loss cost equation.
- Cash-flow volatility from investing/financing - Q3 showed a large negative net cash flow (-$779.17M) driven by investing outflows (-$887.40M) even though operating cash flow was healthy. Financing activity has been lumpy (Q2 had large financing inflow). Execution on M&A or capital allocation matters.
- Sentiment and short-interest - the stock has appeared on most-shorted lists. While short interest can create upside via squeezes, it also magnifies downside pressure if results disappoint.
- Execution on monetization - converting trials or one-off purchases to durable subscriptions and higher ARPU categories is operationally hard; failure to do so would compress margin expansion potential.
Counterargument: skeptics will point to the stock's steep multi-month decline from its highs and to headlines that question leadership changes or market saturation. That's fair. But the company is currently printing positive operating income and strong operating cash flow multiple quarters in a row, while revenue continues to scale. If management can sustain operating-leverage and convert a higher share of revenue to cash, the gap between fundamentals and sentiment is large enough to support a tactical long.
What Would Change My Mind
I would materially change the bullish stance if any of the following occur:
- Two consecutive quarters of revenue deceleration or margin deterioration versus the recent trending quarters.
- Clear evidence of large-scale churn in subscription cohorts or a meaningful drop in repeat purchase rates.
- A regulatory event materially restricting the company's ability to deliver telehealth prescriptions or creating high incremental compliance costs.
Conclusion
Hims & Hers is an actionable long based on improving, cash-generative operating performance, a large and growing addressable market, and a valuation that has room to rerate if the company sustains growth and margin progress. The trade is not without risks - regulatory, competitive, and cash-flow variability are real - but a disciplined entry in the $33-36 band with a $29 stop and staggered upside targets offers an asymmetric risk/reward given current fundamentals. I'll be watching upcoming results and any GLP-1 / weight-loss commercialization moves closely; continued operating cash flow and revenue growth are the two items that will keep me constructive.
Data references: latest quarterly filings through 11/03/2025 (Q3 FY2025), and quarterly results reported 08/04/2025 (Q2 FY2025) and 05/05/2025 (Q1 FY2025).