Hims & Hers Raises Revenue and Profit Forecasts for 2024 Significantly - Expectations far Above Analysts' Estimates Thanks to Booming Weight Loss Division
Hims & Hers achieved impressive financial results in the first quarter of 2024. The company reported revenue of $316 million, exceeding expectations of $301 million. Revenue growth accelerated to 52% year-on-year, an increase from 45.8% in the previous quarter. Subscriber growth and order value The number of subscribers grew by 43% YoY to 1.864m. Average order value increased 27% YoY to $121. Monthly online revenue per subscriber remained stable at $57. Gross margin and cost of sales Although the cost of sales increased by 56%, the...
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'post_content' => 'Hims & Hers achieved impressive financial results in the first quarter of 2024. The company reported revenue of $316 million, exceeding expectations of $301 million. Revenue growth accelerated to 52% year-on-year, an increase from 45.8% in the previous quarter.
Subscriber growth and order value
The number of subscribers grew by 43% YoY to 1.864m. Average order value increased 27% YoY to $121. Monthly online revenue per subscriber remained stable at $57.
Gross margin and cost of sales
Although the cost of sales increased by 56%, the gross margin remained stable at 81%, slightly below the projected 82.3%. CFO Okupe mentioned that new product offerings such as GLP-1 and the expanded weight loss division slightly deteriorated margins in the short term, but expects a return to higher margins through strategic actions such as the acquisition of a 503B manufacturing facility.
Weight loss division
The weight loss division showed strong growth with almost 100,000 new registrations in over seven months. This took other divisions 18-24 months. "In the middle of Q2, we expanded this offering with the launch of compiled GLP-1 injections on the platform. We expect significant contributions from across the solution portfolio as we continue to develop personalized oral solutions as well as our GLP-1 offering. We believe we are in the early stages of utilizing our platform to have a transformative impact on how consumers receive treatment for some of the most emotionally resonant conditions," commented CFO Okupe.
The discussion highlighted Hims\' oral weight loss products, which include personalized oral treatments. These products are part of the company\'s comprehensive weight management strategy, which includes GLP-1 injections. The oral solutions target different aspects of weight loss, such as appetite control and metabolic support, and are not directly related to GLP-1, which is typically used in injectable form to influence insulin production and satiety.
Andrew Dudum commented in the letter to shareholders: "The strength of our existing offering was also on full display, with revenue of over $300 million in the quarter excluding contributions from the GLP-1 launch, representing year-over-year growth of more than 46%."
New share buyback program
The company has announced a new $100 million share repurchase program to be utilized over the next three years. This program is intended to partially offset the dilution from share-based payments, which amounted to around $24 million in the past quarter after $19 million in Q1.
Marketing costs
Marketing costs as a percentage of gross profit fell from 66% in 2021 to 56%. Customer acquisition costs amounted to around USD 842 per new customer compared to USD 989 million in the same quarter of the previous year.
Cash flow
In the second quarter of 2024, operating cash flow increased by 219% to $ 53.6 million. After deducting capital expenditure, free cash flow amounted to $47.6 million, an increase of 377% compared to the same quarter of the previous year.
Adjusted EBITDA margin
The adjusted EBITDA margin improved to 12.3% (expected: 11.3%), compared to 5.1 % in Q2/2023. Adjusted EBITDA amounted to $39.3 million, an increase of 257 % YoY. This development indicates that the EBITDA margin target of 20-30% is achievable and the company is expected to reach its 2025 targets a year early.
Net profit and EPS
The company reported net income of $13.3 million and GAAP EPS of $0.06, beating estimates of $0.05.
Outlook
For Q3 2024, Hims & Hers is setting high sales targets with a projected growth of 65% to 68%. Revenue of between $375 million and $380 million is expected, well above analysts\' estimates of $329.4 million.
The annual sales forecast has been raised to $1.37-1.40 billion, compared to the previous forecast of $1.2 to $1.23 billion and analysts\' expectations of $1.26 billion.
For adjusted EBITDA, the company now expects $140-155 million, compared to a previous expectation of $136 million, which corresponds to an adjusted EBITDA margin of 10-11%.
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