Cedar Grove Capital Management
Equity Research
Hims & Hers Health (HIMS): Much Upside, But Currently Tight Around the Belt
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Hims & Hers Health (HIMS): Much Upside, But Currently Tight Around the Belt

Preliminary disclaimer: In order to continue being completely transparent with you all, I need to disclose that I was previously an employee of Roman Health Ventures (“Ro”), a direct competitor of Hims & Hers Health (HIMS). While I have not been an employee of them for several years, I’m still very knowledgeable about the inner workings of this industry and still hold shares as a previous employee.
While I may drop in publicly available information about Ro for this particular research, I am not speaking for or on behalf of Ro nor do I have any inside information about anything since I left that position. This research will be strictly focusing on Hims and why I believe it’s a multi-year success story.

Hims & Hers Health (HIMS) has been on my radar for quite some time. As a previous employee of Ro, part of my job was to keep track of the competitive landscape and HIMS happened to be within that scope.

When the company first went public via a SPAC in early 2021, I was very open on Twitter about my pessimism about it being overvalued which inevitably was true and led to its nearly 80% decline.

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It bottomed in May of 2022 and has slowly been climbing its way back up ever since by showing strong underlying fundamentals and eventually becoming GAAP profitable for the first time earlier this year. While it made no sense for me personally to increase my exposure to the space by double-dipping with Hims (since I already had my Ro shares), Ro’s public comments about not focusing on an IPO at the moment changed my mind on things.

In an effort to possibly reward myself with a competing company’s growing fundamentals and liquid nature, I ended up taking a very large position in Hims which I disclosed to you all on May 12th.

However, as sell-side reports claimed that Hims was getting too far ahead of itself and Andrew (CEO) decided to make some pretty unnecessary Twitter comments about the Israel/Palestine war, the stock dipped another ~10% after an already ~15% decline from the earlier SS reports.

Despite all that, Hims was able to show another strong earnings report (Q1’24), upbeat guidance, and a new compounded GLP-1 offering which has led the stock to return just shy of 85% since bottoming out in early May. My position alone is up >70% since the end of March.

As I mentioned in past posts, the positions that I hold are meant to be held for a while. I'm not good at trading for the short-term and the added stress of that does not interest me, especially when as an investor you need to consider the tax implications of such a strategy. Something I learned from Ron Baron.

But while the stock is up >560% since May 2022, and 133% year to date, I do not think that this means the story is fully played out. Trading at 3.4x EV/Sales and 33x EV/EBITDA with no debt, an >$200 million cash war chest, and positive FCF over the last 5 quarters (and growing), I think the execution of Hims and market potential is still very much in the early innings.

Below is why it’s (now) my second largest position and why I’ll look to continue sizing up as the opportunity presents itself. My valuation model is included at the end.

Thinking about if it’s worth it? Click here to see past work.


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Cedar Grove Capital Management
Equity Research
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