HIMS is up 28% in 2 weeks. Follow up.

Author

Finset Research
October 15, 2024

HIMS is up a whopping 28% since I covered it just two weeks ago here

So I wanted to follow up. We only send emails to subscribers when there is useful information on the companies we cover.

📈 What happened?

The FDA recently announced that compounding pharmacies could continue to produce copycat weight-loss drugs.

This decision allows HIMS to maintain and expand its offerings in the weight management sector, particularly with GLP-1 medications.

Market Sentiment: As a result, the stock moved 10% on the news.

💊 What is GLP-1?

GLP-1 is a hormone that is naturally produced in the intestines in response to food intake. It plays a crucial role in glucose metabolism by stimulating insulin secretion, inhibiting glucagon release (which raises blood sugar levels), and slowing gastric emptying.

How GLP-1 Treatments Work:

  1. Blood Sugar Control: GLP-1 medications help lower blood sugar levels by enhancing the body's response to insulin when glucose levels are elevated.

  2. Weight Loss: These treatments can promote weight loss by reducing appetite and food intake, as well as increasing feelings of fullness after meals.

  3. Cardiovascular Benefits: Some GLP-1 medications have been shown to have cardiovascular benefits, reducing the risk of heart disease in patients with type 2 diabetes.

Cool, but why is this important?

It is so HIMS can deliver on their Weight Loss strategy:

That they have scaled at a record pace: The weight loss specialty, including GLP-1s, achieved a run rate of $100 million in annual revenue within less than a year of its launch, marking it as the fastest specialty to reach this milestone for the company.

The addressable market is over 100 million people in the United States.

Expectations from GLP-1 Medications:

  1. Strategic Growth Driver: The introduction of GLP-1 medications is seen as a strategic growth driver for $HIMS, particularly in the weight management category. The company aims to scale its offerings to over 100 million potential consumers suffering from weight-related challenges.

  2. Personalized Solutions: $HIMS emphasizes the importance of personalized treatment plans, including tailored dosages of GLP-1 medications. This approach enhances patient adherence and satisfaction by addressing individual needs and side effects.

  3. Broadening Access: The company has expanded access to compounded GLP-1s across 30 states, covering over 60% of the U.S. population. By the end of the year, nationwide availability is planned.

  4. Holistic Approach: The GLP-1 offerings are part of a broader strategy to provide holistic treatment options that also include lifestyle and dietary support, aiming to improve overall health outcomes for consumers.

  5. Long-Term Market Potential: The management believes that the GLP-1 market will continue to grow, driven by increasing awareness of obesity as a medical condition. They expect to maintain a strong presence in this market even as supply dynamics change.

  6. Technological Integration: The company is investing in technology, including AI and machine learning, to optimize the personalization of GLP-1 treatments, enhance the provider-patient interaction, and improve treatment outcomes.

Can the FDA reverse their decision?

Yes, quite easily, since the original statement was that there was no shortage of these drugs. However, weight loss is only one piece of the company’s growth:

I am excited to see the company deliver on this strategy, so I will not be taking profits anytime soon.

Happy Investing,
Andy

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