Hims & Hers stock (HIMS) drops 24% after Amazon telehealth announcement—here's why
Amazon is stepping into telehealth with fixed-price treatments for Prime members, sending Hims & Hers stock (HIMS) tumbling 24% on Thursday—its worst day ever.
This move directly challenges the digital health market, which lies at the core of Hims & Hers's business.
After the announcement, Bank of America (BofA) downgraded Hims & Hers from “buy” to “underperform,” citing Amazon's pricing advantage of 29% on hair loss treatments and 42% on erectile dysfunction medications.
That poses a serious threat to the company’s profit margins, which top 80% on these products.
“Amazon’s massive reach (an estimated 150 million Prime members) creates a significant competitive challenge for HIMS, even if it lacks personalized options,” Bank of America analysts wrote in a note Thursday.
Leerink Partners analyst Michael Cherny agreed, saying, “Amazon’s rollout offers a similar level of convenience but at a lower price point across the board. This is a serious competitive threat.”
Amazon’s new service, available through the $3.9 billion One Medical platform it acquired in July 2022, will offer Prime members virtual doctor visits for $49.
The service covers over 30 conditions, with prescriptions ranging from $2 for basic meds to $43 a month for specialized treatments—all delivered via Amazon Pharmacy.
Bank of America scales back HIMS growth expectations
Amazon’s entry into telehealth has prompted Bank of America to cut Hims & Hers’ revenue forecasts by 10 percentage points for 2025 to 2027.
The news couldn’t come at a worse time. Hims & Hers just posted a strong third quarter, with revenue surging 77% to $401.6 million and its subscriber base growing 44% to over 2 million.
The company has also tapped into the booming weight-loss drug market, which Bank of America estimates brought in $63-70 million in Q3 alone.
Looking ahead, Hims & Hers plans to launch a generic version of Novo Nordisk’s popular diabetes and weight-loss drug, liraglutide, in 2025.
“We’ve already secured a core supplier for this product and expect to finalize test and batch validation in the coming months,” CEO Andrew Dudum wrote in the company’s Q3 shareholder letter.
But most of Hims & Hers’ business still relies on hair loss and erectile dysfunction treatments. That’s exactly where Amazon is undercutting them with prices like $16 per month for hair loss medications and $19 per month for ED treatments.
Amazon isn’t new to healthcare, having launched its online pharmacy in 2020 after acquiring PillPack. While some ventures like Amazon Care were scrapped, its latest push into telehealth could pose a bigger threat to competitors like Hims & Hers.