HIMS Transitions to Brands in 1Q:26 as Margins Come Under Pressure; Maintain Neutral

Research evidence excerpt

HIMS Transitions to Brands in 1Q:26 as Margins Come Under Pressure; Maintain Neutral

Investment Thesis

We rate shares of Hims & Hers Health (HIMS) Neutral. HIMS is one of the most widely recognized direct-to-consumer platforms with

offerings across various health and wellness areas. COVID increased tele-health adoption, and even post-COVID, usage remains

solid. Furthermore, unlike pure tele-health platforms that rely on remote visits, a bigger part of HIMS’ value proposition is its access

to medications and treatment plans, so in our view HIMS is better insulated from the risk of more people returning to in-person

visits. The compounding pharmacies that HIMS affiliates with allow it to offer drugs at a lower price and to offer personalizedHEALTHCARE products that are tailored to address unique patient clinical needs. Over 50%+ of members use a personalized product with HIMS,

IT and that number is increasing, helping differentiate the platform and making it stickier. HIMS has a recurring revenue model, so it

can leverage higher retention and adherence while it adds more members. GLP-1s and the massive weight loss market is a key near-

term catalyst for HIMS. Weight loss is the fastest growing specialty HIMS has ever launched, and its offerings reached a $100M+AND revenue run rate in only ~6-7 months. About ~70% of American adults are overweight or obese, and the GLP-1 market is expected

to exceed $100B+ over the next few years. We like how HIMS’ original specialties like sexual health continue to grow nicely and

reduce HIMS’ concentration risk compared to other DTC platforms that are solely “GLP-1 stories” and are heavily exposed to how

the weight loss market plays out. Its newer Hers and dermatology offerings are growing well too. There is plenty of room for HIMS