Hims & Hers Health, Inc. (HIMS - Get Rating) is a multi-specialty telehealth company connecting consumers to healthcare professionals. Its cloud-based technology enables consumers to access medical care and purchase health and wellness products and services. In addition, the company’s telehealth services allow consumers to talk to medical professionals and industry experts.                     

On June 7, HIMS’ director Jules A. Maltz bought 50,000 shares for approximately $199,500. This follows CFO Oluyemi Okupe’s 7,500 HIMS stock purchase for more than $26,000 last month.

Shares of HIMS have gained 5.6% over the past five days and 28% over the past month. However, the stock fell more than 34% year-to-date due to the bearish broader market sentiment.

Here’s what could shape HIMS’ performance in the near term:

Poor Financials

HIMS’ revenues increased 93.7% year-over-year to $101.31 million in the fiscal first quarter ended March 31, 2022. Gross profit came in at $74.76 million, up 85.7% from the same period last year. However, the company’s gross margin declined 300 basis points from the year-ago value to 74%.

Loss from operations amounted to $16.92 million, while net loss stood at $16.25 million. Loss per share came in at $0.08. Operating cash outflow increased 21.7% from the prior-year quarter.

Negative Profit Margins

HIMS’ trailing-12-month EBITDA margin and net income margin are negative 22.72% and 22.60%, respectively. The company’s trailing-12-month EBIT margin is negative 24.41%, while the trailing-12-month ROE stands at negative 23.38%.

In addition, HIMS’ trailing-12-month ROTC and ROA are negative 15.66% and 18.98%, respectively.

POWR Ratings Reflect Bleak Prospects

HIMS has an overall rating of D, which translates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of D for Momentum and Value. HIMS is currently trading below its 200-day moving average of $5.80, indicating a downtrend, in sync with the Momentum grade. In addition, the stock’s forward Price/Book multiple of 2.98 is 20% higher than the industry average of 2.48, justifying the Value grade.

Of the 84 stocks in the D-rated Medical – Services industry, HIMS is ranked #69.

Beyond what I’ve stated above, view HIMS’ ratings for Growth, Stability, Sentiment, and Quality here.

Bottom Line

Analysts expect HIMS’ EPS to remain negative until at least 2023. Moreover, HIMS’ management expects the company’s adjusted EBITDA loss to be between $20 million and $30 million, respectively. Given its negative profit margins and ROE, the stock is best avoided now.

How Does Hims & Hers Health (HIMS) Stack Against its Peers?

While HIMS has a D rating in our proprietary rating system, one might want to consider looking at its industry peers, McKesson Corp. (MCK - Get Rating), NextGen Healthcare, Inc. (NXGN - Get Rating), and Viemed Healthcare, Inc. (VMD - Get Rating), which have an A (Strong Buy) rating.

HIMS shares were trading at $4.42 per share on Wednesday morning, up $0.04 (+0.91%). Year-to-date, HIMS has declined -32.52%, versus a -20.44% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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