Hims & Hers (HIMS): Profitability Turnaround Collides With Legal and Regulatory Overhang

Profitability on Paper — and a Legal Storm in the Market#

Hims & Hers (ticker: [HIMS]) closed at $46.79 in the latest snapshot while reporting FY2024 revenue of $1.48B and net income of $126.04MM, marking the first full-year positive net income in the dataset. Those numbers suggest a company that has scaled revenue and converted a segment of that growth into profits. At the same time, the stock remains volatile after a >34% intraday collapse tied to the June 23, 2025 termination of the Novo Nordisk collaboration and fresh reporting that the Federal Trade Commission is investigating Hims’ advertising and subscription cancellation practices. The combination — improving reported fundamentals and outsized headline risk — creates a sharp tension between operational momentum and event-driven downside.

The fiscal picture and the legal/regulatory headlines are both material and immediate. Investors should reconcile the arithmetic of the 2024 profit turn with the practical consequences of lawsuits and regulatory scrutiny that could affect revenue durability, customer economics and cost of capital.

What the 2024 Financials Actually Show#

Hims’ FY2024 income statement and cash-flow profile demonstrate meaningful scale and a change in profitability versus prior years. Revenue rose to $1.48B in 2024 from $872.0MM in 2023 — an independent calculation shows a year‑over‑year increase of +69.63%. Gross profit reached $1.17B, leaving a gross margin of 79.45%, down modestly from 81.99% in 2023 (a decline of -2.54 percentage points). Operating income moved from an operating loss of -29.45MM in 2023 to an operating gain of 61.90MM in 2024 (operating margin 4.19%, a swing of +7.57 percentage points). Net income swung from -23.55MM in 2023 to 126.04MM in 2024 — an effective change of +149.59MM, which equates to a percentage swing of +634.90% when measured against the prior-year loss base.

Free cash flow also accelerated strongly: free cash flow in 2024 was $198.33MM versus $46.99MM in 2023 — an increase of +322.04%, supporting the profitability narrative with cash conversion. Operating cash flow improved to $251.08MM in 2024 from $73.48MM in 2023, indicating operational cash generation accompanied the reported net income (all figures per company filings and FYE 2024 cash-flow statement).

At year-end 2024, Hims’ balance sheet shows cash and cash equivalents of $220.58MM and total debt of $11.35MM, yielding a net cash position (net debt) of - $209.24MM. Using the 2024 fiscal numbers, the company’s calculated current ratio is 1.79x (total current assets $395.83MM / total current liabilities $221.37MM). Calculating return on equity on a FY‑2024 basis using average shareholders’ equity [(344.03MM + 476.72MM)/2 = 410.375MM] gives ROE ≈ 30.73% (126.04MM / 410.375MM), which differs from some TTM metrics reported elsewhere — a point I address below.

These outcomes tell a consistent story of scale delivering operating leverage in 2024: strong topline growth, margin recovery and substantial cash-flow improvement. The math is straightforward and anchored to the FY2024 filings (Form 10‑K filed Feb 24, 2025).

Financial Trend Table (Income Statement, FY2021–FY2024)#

(Table source: company fiscal-year financial statements, FY2021–FY2024 filings.)

Balance Sheet Snapshot (FY2021–FY2024)#

(Table source: company fiscal-year balance-sheet filings.)

Reconciling Reported TTM Metrics and My Calculations#

Some widely circulated TTM metrics in third‑party data (for example, current ratio reported as 4.98x and debt-to-equity shown as 185.6%) diverge materially from the straightforward fiscal-year calculations above. Those TTM figures appear to use different numerator/denominator definitions (e.g., an expanded cash definition, pro forma items, or trailing‑12‑month adjustments including earlier quarters). When evaluating the company’s balance-sheet leverage and liquidity, I prioritize the year‑end GAAP balance-sheet snapshots and the cash-flow statement because they reflect how much cash and debt the company actually had at the close of FY2024. Using those figures, Hims is net cash on a GAAP basis (net debt - $209.24MM) and shows a current ratio of 1.79x at year‑end — solid, but not the outsized 4.98x that appears in some TTM summaries.

Discrepancies matter because leverage ratios and liquidity metrics are central to assessing the company’s ability to absorb legal costs or regulatory penalties. Net cash provides flexibility; at the same time, high market capitalization relative to underlying EBITDA reduces the margin for error in valuation if revenue growth slows.

Valuation Multiples — the Arithmetic Investors See#

Using the snapshot market capitalization of $10.18B and FY2024 GAAP figures yields different multiples than some forward or TTM consensus metrics. Market-cap-to-revenue using FY2024 revenue is roughly +6.89x (10.18B / 1.48B). Enterprise value, approximated as market cap minus net cash (10.18B - 0.209B ≈ 9.97B) divided by FY2024 EBITDA (78.99MM) produces an EV/EBITDA of ~126.26x on FY2024 numbers. That multiple is meaningfully higher than many third‑party reported EV/EBITDA metrics (some sources report ~65x) because those sources appear to use trailing-12-month EBITDA or analyst forecasts. The takeaway: on reported 2024 GAAP EBITDA, the market capitalization implies a very high multiple — a function of rapid historical growth expectations embedded in the share price.

Note also reported per‑share and market metrics: the snapshot EPS figure in market-data provided is $0.79 and the snapshot P/E reported is 59.23x, which is consistent with price / EPS using the quoted closing price $46.79.

Where Growth Came From — Quality and Sustainability#

Top-line growth has been the dominant story: revenue grew from $271.88MM in 2021 to $1.48B in 2024, a multi‑year CAGR that the vendor data places at ~75.77% over three years. The company’s gross margins have remained high (mid‑to‑high 70s–80s percent), implying strong product-level economics — either high-margin digital/telehealth services, prescription margins, or a product mix favoring software and recurring revenue. Importantly, operating leverage appeared in 2024: SG&A line items remain large (2024 SG&A $846.61MM) but revenue scale outpaced those costs and operating income returned to positive territory.

Quality checks: the conversion of operating profit into cash is visible in the 2024 operating cash flow of $251.08MM and free cash flow of $198.33MM, which suggests reported profits are supported by underlying cash generation rather than purely non‑cash accounting items.

The Operational and Strategic Risks — Why Headlines Hurt#

The organic growth story is sound on the numbers, but the company faces two intertwined event risks that materially affect investor calculus. First, the June 23, 2025 termination of the Novo Nordisk collaboration (an event that precipitated a >34% intraday stock drop) removed a strategic partnership that the market treated as a growth anchor. Second, the FTC is reportedly investigating Hims’ advertising and subscription cancellation practices, a probe the company has acknowledged cooperating with, and which has been reported as active for more than a year by Bloomberg and other outlets Bloomberg. The FTC’s concerns — whether marketing claims were misleading and whether cancellation flows obscure recurring charges — directly target the customer-acquisition and retention mechanics that underpin unit economics.

Parallel to these regulatory risks, multiple securities class action lawsuits have been filed alleging misleading statements and omission of material risk, with plaintiffs tying damages to the stock drop following the Novo Nordisk termination. Several plaintiffs’ firms have issued notices and deadline reminders for prospective lead plaintiffs, and the consolidated litigation is proceeding in federal court (see PR notices and law-firm announcements) PR Newswire - investor deadline notice.

Those legal and regulatory developments create three practical financial exposures. First, potential direct monetary costs (penalties, consumer redress, or settlement). Second, operational friction: required changes to advertising language or cancellation mechanics could raise customer-acquisition cost and reduce lifetime value. Third, reputational and headline-driven churn that slows user growth at precisely the point where scale is needed to justify high multiples.

Historical Execution and Management Credibility#

Management has demonstrated an ability to scale revenue rapidly and to move to positive operating income and cash flow. That track record supports a baseline that the business model can generate operating leverage. However, the legal/regulatory episodes expose governance and disclosure practices to scrutiny. Management has stated it is cooperating with the FTC probe; beyond that, formal disclosures in SEC filings (8‑K/10‑Q) will be the primary reliable sources for material developments. The speed of filings, the detail of risk disclosure updates and any reserve recognition will materially affect investor perception.

What This Means For Investors#

Hims & Hers presents a clear duality: a company that achieved scale and generated positive GAAP net income and cash flow in FY2024, yet one whose market value embeds high growth expectations that are vulnerable to headline and regulatory shocks. The most immediate implications are threefold.

First, liquidity and balance-sheet flexibility are meaningful mitigants. Hims finished 2024 with net cash (- $209.24MM) and generated $198.33MM in free cash flow in 2024, giving management the capacity to fund operations, defend claims, or settle litigation without immediate solvency stress. Those facts reduce the probability of acute financial distress but do not eliminate the economic cost of legal outcomes.

Second, valuation sensitivity is high. Using FY2024 EBITDA, enterprise-value multiples are extremely elevated (EV/EBITDA ~126.26x on my calculation). That math means the market is pricing substantial forward growth; any durable slowdown from regulatory remediation or loss of a commercial partner would materially compress multiples and increase downside volatility.

Third, near‑term news flow will dominate price behavior. Material items to watch are (a) formal FTC findings or consent decrees, (b) developments in the consolidated securities litigation including any lead-plaintiff appointment and discovery that could surface internal documents, and (c) quarterly top-line and unit-economics updates that show whether customer acquisition and retention remain intact post-headline.

Key Takeaways#

Hims & Hers has demonstrable scale and achieved GAAP profitability and strong free cash flow in FY2024, with revenue up +69.63% YoY to $1.48B and free cash flow up +322.04% to $198.33MM. Those are material operational improvements. At the same time, legal and regulatory overhangs — notably the June 23 termination tied to Novo Nordisk and an active FTC probe into advertising and cancellation practices — create headline risk that can impair user economics and valuation multiples. The balance sheet provides a cushion (net cash - $209.24MM), but the market’s valuation implies high future growth that is now exposed to execution and compliance risk.

Closing Synthesis#

Hims & Hers today is a scaled direct-to-consumer health company that converted scale into positive GAAP earnings and strong cash flow in FY2024. Those achievements are real and supported by the cash-flow statement. However, the company’s market value reflects aggressive forward expectations that are vulnerable to the twin shocks of regulatory findings and securities litigation. The logical frame for stakeholders is straightforward: separate the operating trend — robust top-line expansion and improving margins — from the event risk calculus. Monitor SEC filings for quantification of legal reserves, track FTC developments via credible reporting (e.g., Bloomberg) and watch sequential quarterly metrics for any signs that customer acquisition cost or retention worsens after required changes to marketing and cancellation mechanics.

This is a company with operational strengths and headline-driven weaknesses. The arithmetic of 2024 shows clear progress; the path forward depends on how management navigates regulatory scrutiny and litigation while maintaining the customer economics that turned rapid growth into profits.

(References: Hims & Hers FY2024 Form 10‑K and fiscal-year filings, company cash-flow statements and balance sheets filed Feb 24, 2025; reporting on the FTC probe and market reaction from Bloomberg and market notices from PR Newswire and firm announcements linked in-source: Bloomberg, PR Newswire - deadline notice.)