Hims is crashing, but its secret biotech bet is exploding
Shares of telehealth provider Hims & Hers Health (HIMS) have tumbled since October amid weakening order trends and a softer fourth-quarter outlook. Still, the company is generating gains in other areas, including a lucrative investment in a California biotech firm.
After surging to nearly $63 a share on Oct. 15, HIMS has fallen about 38% and is now trading near its lowest level since the April “Liberation Day” crash. The decline has trimmed its year-to-date gain to a still-strong 64%, down from a peak of roughly 130% earlier this year.
Some of the recent weakness has followed a bearish outlook from Bank of America, whose analysts have flagged slowing customer growth and regulatory uncertainty tied to Hims’ weight-loss drug business.
The bank reiterated its negative rating on the stock and set a $32 price target, implying nearly 20% downside from current levels.
The call followed Hims’ third-quarter earnings report, in which revenue jumped 49% year over year to $600 million, even as the company issued fourth-quarter revenue forecasts that fell short of Wall Street expectations.
Hims posts 57% gain on Grail investment
Even as its core business faces pressure, Hims & Hers scored a significant win in the public markets. On Oct. 20, the company disclosed an investment in biotech firm Grail, which raised $325 million in a public stock offering priced at $70.05 per share — about a 10% discount to its prior close.
Since then, Grail shares have climbed past $110, leaving Hims sitting on a gain of roughly 57% on that investment.
For Hims, the logic behind the Grail investment is straightforward.
Grail develops blood tests designed to detect cancer at very early stages, and Hims’ large, digital-first customer base could one day serve as a channel to offer early screening and preventive health testing directly to consumers through its online platform.
Hims’ Novo Nordisk fallout continues to reverberate
Analysts have grown more cautious on Hims & Hers following its public dispute with Novo Nordisk in June, after the drugmaker accused Hims of unlawfully selling compounded versions of its popular weight-loss medications.
As reported by InvestorsObserver, analysts at Morgan Stanley estimated that sales linked to compounded versions of weight-loss drugs may have accounted for as much as half of Hims’ projected $725 million in weight-loss-related revenue at the time.
Despite the public dispute, legal experts have said it remains unclear whether Novo Nordisk will pursue formal legal action. As of November, no lawsuit had been filed.