Strong earnings have sent this healthcare company higher today.
Shares of growth stock Hims & Hers Health (HIMS 7.21%) jumped as much as 17.1% in trading on Tuesday after the company reported first-quarter 2024 financial results. As of 3 p.m. ET, shares were holding about an 8.4% gain for the day.
Crushing expectations
Hims & Hers said revenue for the quarter jumped 46% from a year ago to $278.2 million and sailed past the $268.7 million that analysts were expecting. The company also reported net income of $11.1 million, or $0.05 per share on an adjusted basis, topping Wall Street estimates of $0.01 in earnings per share.
Management said the number of subscribers jumped 41% from a year ago to 1.7 million people and revenue per subscriber stayed flat at $55. New product launches have helped grow the opportunity, but clearly, the core value proposition is working for Hims & Hers.
A big year ahead
Management also said 2024 revenue would grow between 38% and 41% to $1.20 billion to $1.23 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to increase 10% to 11% to between $120 million and $135 million. That’s a solid value for a company currently worth $2.7 billion, given the growth rate.
Investors have long questioned whether Hims & Hers growth is sustainable, given potentially high churn and high customer acquisition costs. But the model continues to work and, as it does, investors put more value on the company’s growth. I think the market’s reaction as the day wore on is starting to create a buying opportunity for long-term investors looking at a growth stock in healthcare.
Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
