Will Hims & Hers Fall Along With Novo Nordisk?

One of the most widely watched names in the healthcare sector is Hims & Hers Health Inc. (NYSE: HIMS), not only due to its rampant price action over the past six months, but also because of its underlying growth story, which almost makes it feel like a miracle in the making. The reason behind its popularity lies in the fact that it combines the safety of health services along with the sort of growth reserved for the technology space of the market.

However, most investors have associated Hims & Hers stock with the world of weight loss lately, in a sort of Ozempic boom. Given the company's recent entry into this space, this association has some justification.

However, these assumptions overlook the fact that the company was already on a path to success and compounding growth before making this decision.

The stakes are particularly high, along with uncertainty, now that shares of Novo Nordisk (NYSE: NVO) have fallen by as much as 31% over the past month alone. The bearish reaction was triggered by regulatory intervention and investigations into weight loss products, which specifically targeted Novo Nordisk due to its overconcentration in the product and limited diversification.

Will Hims & Hers Slump Along With Novo?

Due to correlation regimes, it is likely that shares of Hims & Hers stock will also experience a slight slump. However, the fundamentals dictate that the decline shouldn’t be as harsh as it was for Novo Nordisk. With a diversified product offering and a completely different business model, here is why Hims & Hers might make it out okay.

Hims & Hers leverages the world of telehealth in a way that Novo Nordisk can’t, and that means operating as a remote platform that monetizes through the best way investors tend to look for in every business: Subscriptions. Because over 90% of the company’s revenue comes through subscriptions, Hims & Hers might hold stronger than expected.

This is because subscriptions enable investors and Wall Street analysts to more accurately predict future financials in any business, as the churn rate tends to be significantly lower, particularly in healthcare services. With this in mind, the fact that Hims & Hers stock still trades at 95% of its 52-week high should be a strong sign that optimism is still alive.

On the other hand, Novo Nordisk has fallen to a dismal 35% of its 52-week high, showing investors how aware the market is that Hims & Hers is not as exposed to weight loss products as Novo Nordisk is today. The probability that this momentum will continue into the future is high, and evidence can be found in the company's fundamentals.

All Indicators Are Red Hot for Hims & Hers

Investors examining Hims & Hers' latest quarterly results will see no reason for the stock to decline in the near future, despite some concerns about its weight loss product exposure. Revenue has surged 111% over the past year, clearly indicating strong demand for this innovative health platform. The main driver of this growth is the swift and aggressive adoption rate and ongoing expansion of market share that the company consistently reports.

Subscribers grew to 2.4 million, up 38% compared to the same quarter last year. This isn’t just slight price increases per subscription but also attractive growth in the company’s user base, which is the main driver in any technology or subscription-based company.

Another factor investors need to keep in mind is that Hims & Hers management reiterated its full-year financial guidance for 2025. This is a strong point, considering that other companies have chosen not to provide guidance due to the current trade tariffs and inflation uncertainty in the economy.

One benefit of having a business model as predictable and stable as this one is that it provides certainty in a market where every investor needs it. All told, this financial growth boiled down to one of the most important metrics: free cash flow (operating cash flow minus capital expenditures).

Free cash flow was reported at up to $50.1 million for this quarter, which is up nearly fivefold compared to the $11,9 million reported for the same quarter last year. This metric matters because it represents the most raw form of compounding potential, as free cash flow is typically used for reinvestments to drive further growth.

All the evidence, both technical momentum and fundamental growth, seems to point to very low chances of Hims & Hers falling with Novo Nordisk, and that is one conviction investors can take for this name moving forward.

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The article "Will Hims & Hers Fall Along With Novo Nordisk?" first appeared on MarketBeat.