Matrix of Alpha Edge Metrics
Matrix of Alpha Edge Metrics
Hims & Hers Health just dropped its Q3 2025 numbers, and on the surface, they look pretty good. Revenue's up nearly 50% year-over-year, hitting $599 million. Adjusted EBITDA is also up, a solid 53%. Subscribers? Almost 2.5 million, a 21% jump. The company is even talking about partnering with Novo Nordisk on Wegovy, which could be a major catalyst.
But let's dig a little deeper, shall we?
First, that net income figure. $15.8 million for Q3 2025 sounds okay, but it's crucial to remember that Q3 2024's $75.6 million included a $60.8 million tax benefit. Strip that out, and suddenly the picture isn't so rosy. It's like comparing apples and oranges, or in this case, apples and heavily subsidized oranges. What does the future hold for Hims & Hers' potential tax benefits?
Then there's the gross margin. Down from 79% to 74%. Now, a 5% drop might not seem like the end of the world, but in a high-growth company, margin compression is a red flag. It suggests they're having to spend more to acquire or retain customers, which is not sustainable long-term. It's a bit like running faster on a treadmill but burning more calories to do it. Are they sacrificing profitability for growth?
And this is the part of the report that I find genuinely puzzling: free cash flow. It's flat year-over-year at $79.4 million. Revenue is up almost 50%, but free cash flow isn't moving? That suggests some serious inefficiencies in working capital management. Where is all that extra revenue going? Are they plowing it all back into marketing?
The company is narrowing its full-year revenue guidance to $2.335 billion to $2.355 billion and adjusted EBITDA guidance to $307 million to $317 million. The stock jumped nearly 9% on November 24th, with a current price of $37.79. The average 12-month price target is $45.27, about 25% higher than where it's trading today. But here's the kicker: ten out of fifteen analysts rate the stock a Hold, and the consensus rating is Reduce. That's a pretty significant discrepancy between analyst sentiment and price target. It's like saying, "Yeah, I think this stock is going higher, but I'm not confident enough to recommend buying it."
The potential partnership with Novo Nordisk is the elephant in the room. If Hims & Hers can get its hands on Wegovy, it could be a game-changer. The GLP-1 weight loss market is projected to explode over the next few years. But it's also a highly competitive market, and there's no guarantee that the FDA will approve oral Wegovy, or that Hims & Hers will get favorable terms from Novo Nordisk. It's a high-stakes gamble, like betting on a horse race where you don't know the odds.
And let's not forget the short sellers. A whopping 37.54% of the company's float is currently shorted. That's a massive bet against the stock. The short sellers are clearly betting that Hims & Hers' growth story is unsustainable. They're probably looking at those declining margins, the flat free cash flow, and the high valuation (a forward P/E ratio of 52.79) and saying, "This is a house of cards."
But, the bulls will point to the institutional inflows. Over the past year, institutions have poured $2.31 billion into the stock, compared to $1.17 billion in outflows. That suggests that at least some big players believe in the long-term potential of Hims & Hers. But again, it's essential to understand the context. Inflows don't necessarily mean conviction; they could simply be algorithmic trading or passive index investing.
Hims & Hers operates in several high-growth markets: sexual health, hair thinning, telehealth, and now, potentially, weight loss. The telehealth market alone is expected to grow by almost 25% annually through 2030. And CEO Andrew Dudum is touting 50% year-over-year growth in subscribers using personalized solutions. That's the narrative, anyway.
Hims & Hers stock has been a wild ride since it went public in 2021. It's up almost 139% since then, but it's also experienced multiple boom-and-bust cycles. It's a stock that's prone to extreme volatility, driven by hype and speculation rather than solid fundamentals. The company's debt-to-equity ratio is also relatively high at 1.67. As MarketBeat reports, HIMS Has Been a Roller Coaster Ride. Should Investors Hop On?
The accessible, direct-to-consumer telehealth model is certainly appealing, and it's positioned Hims & Hers at the intersection of several attractive markets. But ultimately, the company's success will depend on its ability to execute. Can it maintain its growth rate while improving its margins and generating consistent free cash flow? Or will it become just another overhyped telehealth play that burns through cash and disappoints investors?
The Q3 numbers are a mixed bag. There's growth, but there are also some concerning trends beneath the surface. The potential Wegovy partnership is a wild card that could significantly alter the company's trajectory. But until Hims & Hers can demonstrate that it can generate sustainable profits and free cash flow, it will remain a high-risk, high-reward stock. The short interest alone should give any potential investor pause. It's a story stock, for sure, but it's a story that needs a much better ending before I'm willing to buy in.
