HIMS: The Future Star of US Telehealth Stocks
In the years to come, $Hims & Hers Health Inc.(HIMS)$ is poised to multiply its growth potential in the US telemedicine sector. Its share price has already soared 150% since the start of the year, reclaiming its pre-pandemic peak.
Hims embodies all the hallmarks of a quality growth stock: rapid expansion, a massive untapped market, and a reasonable valuation.
Founded in 2017, Hims is a telemedicine service offering medical consultations, prescription, and OTC health products. It's carved a niche by focusing on sensitive consumer needs like sexual health, contraception, and hair loss.
In 2020, the company rode the pandemic wave to a SPAC listing, skyrocketing due to increased homebound needs and daring marketing strategies.
Investors are drawn to its game-changing model: bridging traditional offline healthcare with digital commerce, easing access for patients and practitioners, and cutting costs by eliminating middlemen like insurers and pharmacies.
Driving Forces for Long-Term Growth
Hims' business is booming. First-quarter revenue jumped 46% to $278.2 million, with subscription users increasing by 41% to 1.7 million. The company boasts an impressive gross profit margin of 82%, enabling substantial investments in marketing (recently totaling $130.6 million).
By flooding the internet with ads, Hims has built a strong brand recognition, creating a moat in a low-barrier telemedicine sector. Ads are flexible expenses, scalable down when profitability's the focus.
Long-term, Hims' rapid growth and first-mover advantage fuel economies of scale (e.g., bulk buying discounts) and network effects (monetizing anonymous user data).
For instance, in May, it launched a GLP-1 weight loss injection priced at just $199/month, an 85% discount to brands like Ozempic and Wegovy from pharma giant $Novo-Nordisk A/S(NVO)$ . Hims is also developing MedMatch, an AI-powered diagnostic service, leveraging its vast user database for real-time treatment recommendations.
Should You Buy This Stock?
Hims & Hers' share price has doubled in no time, with a price-to-sales ratio of 5.2, way above the $S&P 500(.SPX)$ average of 3. But this telemedicine stock has a viable model and is just at the cusp of long-term growth.
However, its telehealth business model is viable and in the early stages of long-term growth. Furthermore, despite being relatively small (market cap of $4.7 billion), the company has turned profitable, shifting from a $10 million loss to $11.1 million in net profit in Q1.
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