Hims & Hers (HIMS): Strong 2024 Financials, But Novo Nordisk Breakup and Class Actions Raise Material Risk

Immediate shock: partnership termination and a legal cascade#

The most consequential development for Hims & Hers ([HIMS]) this summer is a public split with Novo Nordisk that coincided with a one‑day share collapse in the roughly -31.7% to -35.0% range and spawned multiple securities class actions with an August 25, 2025 lead‑plaintiff deadline for certain plaintiffs — a fast‑moving legal timeline that crystallized risk for shareholders and partners alike. The termination, and subsequent allegations that Hims marketed and sold mass‑compounded or otherwise improperly sourced GLP‑1 therapies, shifted the investor conversation from growth and margin recovery to regulatory compliance, partner trust and litigation exposure (see reporting from PharmExec and TechTarget) PharmExec TechTarget.

That shock arrived against the backdrop of a strong FY2024 operational result: revenue jumped to $1.48B and the company returned to profitability with net income of $126.04M, while generating $251.08M of operating cash flow and $198.33M of free cash flow for the year (company FY2024 filings, filed 2025‑02‑24). The tension could not be clearer: Hims’ core operating engine exhibited scale and cash conversion in 2024 even as regulatory and litigation developments immediately put a portion of its higher‑margin GLP‑1 opportunity under severe question (company filing, FY2024).

The interplay between these two realities — demonstrable revenue and cash‑flow momentum on one hand, and partnership fallout plus securities litigation on the other — defines the near‑term investment story for [HIMS]. The market reaction underscores how rapidly regulatory trust can erase growth expectations for companies operating at the intersection of telehealth, pharmacy fulfillment and novel therapeutics distribution.

FY2024 financial performance: growth, margins and quality of earnings#

Hims’ FY2024 results demonstrate a pronounced inflection after several years of investment and operating losses. Revenue rose to $1.48B in 2024 from $872.0M in 2023 — a YoY increase of +69.72% calculated from the reported figures ([$1.48B - $872.0M] / $872.0M = +69.72%). That top‑line acceleration produced a notable gross profit of $1.17B, which translates to a gross margin of ~79.05% on our calculation (gross profit $1.17B / revenue $1.48B). Hims converted scale into operating leverage: operating income moved to $61.9M in 2024 from an operating loss the prior year, producing an operating margin of ~4.18% (operating income $61.9M / revenue $1.48B).

Net income swung from a loss of -$23.55M in 2023 to +$126.04M in 2024 — a change of roughly +$149.59M, which corresponds to a percentage improvement of +634.9% when computed against the 2023 loss base ([(126.04 - (-23.55)) / 23.55] = +634.9%). The improvement reflects both revenue scale and favorable operating leverage; depreciation, amortization and a one‑time items mix contributed to the positive bottom line. Importantly, reported net income is supported by cash generation: operating cash flow was $251.08M and free cash flow $198.33M in FY2024, which signals earnings quality materially better than the loss years of 2021–2023.

We note a small set of data inconsistencies among public summary metrics and line‑by‑line figures that matter for interpretation. For example, standard balance‑sheet math using the FY2024 line items yields a current‑ratio calculation of ~1.79x (total current assets $395.83M / total current liabilities $221.37M). That is materially different from a reported TTM current ratio figure of 4.98x in aggregate metric tables, which appears to use a different cash‑and‑investment definition or a TTM averaging method. Where such discrepancies exist, we have prioritized raw, line‑by‑line FY figures for our calculations and highlighted differences for readers.

Table 1 below summarizes the key income‑statement trends and margins from 2021–2024 using company‑reported values and our computed margins.

Source: company FY financials (filed 2025‑02‑24), table values computed from reported line items.

Balance sheet, liquidity and capital allocation in 2024#

At the end of FY2024 Hims reported $220.58M in cash and cash equivalents and $300.25M in cash and short‑term investments; total assets were $707.54M and total liabilities $230.82M, leaving shareholders’ equity of $476.72M (company balance sheet, FY2024). Using the common definition of net debt (total debt less cash and equivalents), Hims finished 2024 with net cash of ~$-209.2M (total debt $11.35M less cash & equivalents $220.58M). If one instead nets total debt against cash plus short‑term investments, the net cash position is even larger (roughly -$288.9M), which explains part of the variance with other aggregate metrics reported elsewhere.

Liquidity converting into buybacks was a visible form of capital allocation in 2024: the company repurchased $83.04M of common stock and used -$107.84M in net financing cash flow for the year (cash flow statement). That repurchase activity, paired with robust free cash flow of $198.33M, shows a board comfortable returning capital at recent prices even as management pursued reinvestment: capital expenditures were -$52.75M, including -$41.66M of property, plant and equipment investments.

Table 2 contrasts balance sheet and cash‑flow metrics between FY2023 and FY2024 to underscore the balance‑sheet improvement and the cash‑return trend.

1. Net cash calculated by company as total debt less cash & equivalents; alternative net cash using cash + short‑term investments increases the net cash position.

Source: company cash‑flow and balance‑sheet statements (filed 2025‑02‑24).

Quality of the earnings and drivers of improvement#

The 2024 recovery shows three measurable drivers. First, scale: revenue nearly doubled from 2022 to 2024 and more than quadrupled from 2021, delivering meaningful operating leverage against SG&A and fixed costs. Second, mix and margin: gross margins remained high (above 77% historically), indicating a product/service mix with favorable contribution margins — telehealth services and pharmacy margins can be high when fulfillment and gross pharma costs are controlled. Third, cash conversion: operating cash flow and free cash flow both turned strongly positive in 2024, which is a critical validation of reported net income coming from operating improvement rather than non‑cash accounting adjustments.

However, some elements temper unqualified praise. Selling, general and administrative expenses remained high in absolute dollars ($846.61M in 2024), reflecting ongoing investment in growth, marketing and platform buildout. While SG&A leverage is improving as revenue scales, the absolute level creates vulnerability if a significant revenue channel — notably higher‑margin GLP‑1 offerings — is constrained by partner terminations or regulatory action. In 2024 Hims also increased capital spending (capex $52.75M) and engaged in buybacks, choices that emphasize confidence but reduce flexibility if litigation costs or enforcement fines emerge.

Finally, reconciliation of profit to cash is important. The positive net income is backed by strong operating cash flow ($251.08M), but working‑capital swings contributed materially to cash generation (change in working capital reported $78.62M in 2024). That suggests some portion of the FCF lift is timing‑sensitive, and future quarters will show whether working capital normalization sustains cash generation levels.

The Novo Nordisk termination and securities class actions: materiality and scenarios#

The Novo Nordisk termination is the proximate cause cited in multiple securities filings and in press coverage for the abrupt share‑price decline (see TechTarget and PharmExec) TechTarget PharmExec. Plaintiffs allege that Hims overstated the legality and compliance of its GLP‑1 operations and omitted material facts about sourcing and compounding practices. The suits assert that those statements inflated the stock price during a specified class period (plaintiffs have identified April 29, 2025 through June 23, 2025 in filings), and they point to the partner termination as the disclosure event that caused the market repricing.

From a financial impact perspective, the key questions are quantifiable: what proportion of FY2024 revenue and margin relied on the now‑disputed GLP‑1 channels, what revenue cadence will be lost in 2025 because of the termination, and what direct or indirect costs (recalls, fines, legal settlements, increased compliance costs) could be incurred? Public disclosures since the termination indicate that GLP‑1 products were a meaningful, high‑growth revenue vector and a core part of Hims’ higher‑margin adjacencies; however, company filings to date do not provide a single identifiable line item isolating GLP‑1 revenue, so market participants must infer exposure from segment commentary and industry reporting (press coverage and plaintiff filings) GlobeNewswire PR Newswire.

Legal exposure can be large for companies in securities suits, but outcomes vary widely and are driven by discovery, proof of scienter and the degree to which disclosures were objectively misleading. Plaintiffs are pursuing damages tied to the market drop; regulators such as the FTC or state boards may pursue separate remedies if patient‑safety or unlawful distribution practices are substantiated (reporting from Morningstar/PR and national law outlets highlight scope) Morningstar National Law Review.

Competitive context and industry dynamics#

Hims operates at the intersection of telehealth, direct‑to‑consumer pharmacy and lifestyle therapeutics — a space that has attracted incumbents and new entrants alike, and where partnerships with major pharmaceutical manufacturers (like Novo Nordisk) can validate a distribution model. The GLP‑1 wave has been a growth accelerant for telehealth platforms, but it has also drawn regulatory focus because of compounding rules, interstate pharmacy regulations and the complexity of distributing high‑potency peptides outside traditional manufacturer channels.

From a competitive standpoint, Hims’ FY2024 margins and cash conversion suggest it had an operational playbook that scaled well. The risk now is that the competitive edge built on rapid GLP‑1 distribution shrinks, and competitors with more vertically integrated supply chains or deeper compliance track records could advantageously capture market share as regulation tightens. At the same time, Hims’ platform — subscribers, fulfillment infrastructure and brand — is a real asset that a stronger compliance regime could monetize once trust is repaired, creating a possible pathway to re‑entry into the GLP‑1 channel under different sourcing or partnership models.

Investors watching peers should monitor how quickly other telehealth/pharmacy players respond to tightening compounding oversight and whether partners shift distribution strategies to vertically integrated models. The industry is now in the early stages of a regulatory re‑pricing where growth opportunities must be balanced against compliance costs.

Capital allocation: buybacks, capex and balance‑sheet flexibility#

Hims returned capital through $83.04M of share repurchases in 2024 while investing $52.75M in capex. The company finished 2024 with what is best described as a net‑cash position under conventional definitions (total debt $11.35M versus cash & equivalents $220.58M). That balance‑sheet flexibility enabled buybacks and investments and provides an important buffer against litigation or enforcement costs in the near term.

Nonetheless, management’s decision to repurchase shares while legal uncertainty was emerging will be scrutinized by stakeholders. Share repurchases reduce optionality during litigation and compliance remediation, and they can be politically sensitive when regulators or plaintiffs claim the underlying business presented systemic compliance issues. The company’s strong FCF in 2024 gives it the capacity for additional capital deployment, but future allocation choices will be conditioned by legal and regulatory outcomes.

What this means for investors (actionable implications without recommendations)#

Investors should weigh the following data‑anchored implications. First, Hims demonstrated scalable, cash‑generative operations in FY2024: $1.48B revenue, $126.04M net income, $251.08M operating cash flow, and $198.33M free cash flow are facts that materially improve the baseline credit and liquidity picture for the company (company FY2024 filings). Second, the Novo Nordisk termination and ensuing securities suits introduce near‑term binary outcomes: litigation costs, fines or sanctions could materially reduce earnings and cash available for buybacks or reinvestment, while successful defense or remediation could enable the company to retain much of its operational momentum.

Third, the balance sheet is an explicit mitigant: the company entered the post‑announcement period with meaningful cash and short‑term investments and low nominal debt, which provides runway to manage legal defense and regulatory remediation without immediate refinancing risk. Fourth, capital allocation choices made in 2024 (notably buybacks) increase governance scrutiny; future boards and management teams will likely face investor and regulator questions about the timing and prudence of repurchases amid compliance uncertainty.

Finally, watch four measurable near‑term indicators to assess the evolving story: (1) explicit disclosure on the share of revenue tied to GLP‑1 products and the cadence of that revenue going forward; (2) regulatory filings or communications with the FDA/FTC referencing compounding or distribution; (3) material legal milestones in discovery or settlement discussions; and (4) quarterly cash‑flow trends that reveal whether FY2024 working‑capital benefits normalize.

Key takeaways#

Hims & Hers presents a study in contrasts. On one hand, FY2024 shows scale, margin improvement and robust free‑cash‑flow generation — revenue $1.48B, net income $126.04M, and FCF $198.33M are not outcomes associated with a failing operator. On the other hand, the abrupt end of a marquee collaboration with Novo Nordisk and the resulting securities litigation and regulatory inquiries create real, quantifiable downside — both to near‑term revenue from GLP‑1 channels and to cash available for strategic options.

The core investment question is straightforward and data‑driven: can Hims preserve its operating momentum while materially remediating compliance and restoring partner trust? The answers will be revealed through disclosures that isolate GLP‑1 revenue exposure, through legal discovery, and through quarterly cash flow and margin trends. Until then, the company’s strong FY2024 cash generation and low net debt provide optionality, but the legal and regulatory overhang is a material variable that must be priced by the market.

Sources: company FY2024 filings (filling date 2025‑02‑24), public press reporting on the Novo Nordisk termination and securities class actions (PharmExec, TechTarget, GlobeNewswire, PR Newswire, Morningstar).