Phase Space AI

Valuation

Hims & Hers Health [HIMS]

HIMS — Valuation

Two outputs, both required. Neither replaces the other.

Spot $24.68 (last trade 2026-07-29 20:43Z). Shares 231,457,695. Market cap $5,712m. Net cash −$223.2m (net DEBT). EV $5,936m.

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Part 1 — The implied-path test (the Valuation Criteria)

1.1 What was solved for, and what was held fixed

Solved for: the 5-year revenue CAGR. Held fixed and named explicitly:

Cross-check on a TTM base ($2,369.7m) instead of the run-rate: required CAGR 26.9% — the conclusion does not turn on the base choice.

1.2 The answer

Required 5-year revenue CAGR = 26.3%, i.e. revenue of $7,811m in 2031 from $2,432m today.

Terminal value = 100% of EV. Interim free cash flow contributes nothing at this margin path, so the reverse DCF is mandatory as the primary long-horizon output and a forward DCF would be a false-precision exercise. This is disclosed, not hidden inside a multiple.

1.3 The margin: demonstrated − required, in percentage points

This is the number the strategy ranks on. Latest-quarter YoY is shown beside every CAGR, per the brief.

The FY2025 +32.7pp margin is the trap this exercise exists to catch. It is (a) an acquisition-padded number and (b) produced by a legal permission the FDA withdrew on 21 February 2025 and the company itself abandoned in March 2026. A CAGR carried by a temporary compounding permission is not a growth rate, and using it as the "demonstrated" comparator would convert an expired licence into a five-year forecast.

The decisive result is the bottom two rows. Today's price requires more growth than management is guiding to for this year, and more than management's own five-year plan. No analyst judgement is doing any work there.

Direct cross-check on management's plan. Taking the 2030 targets at face value — "at least $6.5 billion in revenue and $1.3 billion in Adjusted EBITDA" (CFO, 11 May 2026) — and translating Adjusted EBITDA to EBIT by removing SBC at FY2025's 5.8% of revenue and D&A at Q1'26's annualised 3.6%:

$1,300m Adj EBITDA − 5.8%×$6,500m SBC − 3.6%×$6,500m D&A = $689m EBIT (10.6% margin)

Discounted 4 years at 13% and adjusted for net debt:

At the base multiple the company's own five-year plan is worth exactly today's price. You are paid nothing for the risk that a plan whose first quarter produced −8.4% US revenue, −14pp gross margin, an operating loss, a $33.5m restructuring charge and a $15m litigation accrual — with the FTC, SEC, DOJ, FDA and a patent plaintiff all active — is delivered late, partially, or not at all.

1.4 Anchoring the exit multiple: UNIDENTIFIED, declared

No comparator set exists whose growth brackets the subject's growth at the exit year for a DTC compounding-pharmacy telehealth business. The candidate universe: Teladoc (shrinking), GoodRx (low single-digit growth, a coupon platform), Doximity (an ad platform at ~80% gross margin — a different business), LifeMD (sub-scale), Amazon Pharmacy (not separable). None is the same business and none brackets the growth. Per valuation.md the multiple is therefore declared UNIDENTIFIED rather than defaulted to a peer median, and the primary output is the sensitivity grid, not a point estimate.

1.5 Sensitivity — over the exit multiple, never over scenario probabilities

Required 5-year revenue CAGR to justify $24.68:

The FAIL is robust across the entire grid. Against the latest quarter (+3.8% total) only the two most extravagant cells clear — 14% terminal EBIT margin and 18–22x exit, i.e. a margin 3.1x the best year this company has ever had combined with a premium multiple. Against US organic (−8.4%) not one cell in the grid clears. Against the company's own 2030 plan (+22.6%), the base cell fails and only 18x+ at a 10% margin clears.

Implied compression, stated as a number. Today's EV/EBIT is undefined — TTM EBIT is −$30.6m. On FY2026 guided Adjusted EBITDA midpoint of $312.5m the stock trades at 19.0x EV/Adj EBITDA. The 14x exit is on EBIT, which sits ~9.4pp of revenue below Adjusted EBITDA at this company (FY2025: 4.5% EBIT vs 13.5% Adj EBITDA). Correctly compared, the base exit assumption is not a compression from today's multiple; it is an implicit expansion, and the FAIL is therefore understated rather than overstated. Per criteria.md the base exit multiple may not sit below every stated anchor without separate argument — here there are no anchors to sit below, which is precisely why it is declared UNIDENTIFIED.

1.6 Verdict

Valuation Criteria: FAIL.

The price requires materially more than demonstrated on every current measure of demonstration, and more than management's own guidance and five-year plan. PASS WITH ARGUMENT was tested and refused: the criteria permit it only where a specific evidenced mix shift, product cycle or pricing action supports the excess. Every named mix shift at HIMS runs the wrong way — branded procurement (lower margin, stated in the risk factors), shorter shipping cadences (lower margin, "we expect this shift to continue"), acquired international (lower margin). The bull leg is the sentence "We expect growth to accelerate from here." Narrative does not qualify.

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Part 2 — The 12-month target

Built as valuation.md demands: from near-term estimates, on the name's own multiple history with the percentile stated. Not a DCF and not a peer median projected forward.

2.1 Near-term revenue base

Consensus is INDETERMINATE — Alpha Vantage returned its rate-limit notice on the first call (quota is shared and was exhausted). Per the brief this blocks nothing. Company guidance is used as the near-term anchor and is labelled as such throughout.

At the 12-month horizon (July 2027) the last reported TTM will be TTM through Q1 2027:

Stated plainly: this build does not reach company guidance. FY2026 on these assumptions is 608 + 685 + 719 + 755 = $2,767m, below the $2.8bn guide low end. The guide requires ~$801m in each of Q3 and Q4 — +17% sequential twice — from a quarter that just printed −1.6% sequential. The Adjusted EBITDA guide is worse: H1'26 lands at ~$79–99m (Q1 actual $44.3m + Q2 guide $35–55m) against a full-year $275–350m, requiring H2 to be 2.0–2.5x H1. The FY2026 guide was raised at Q1. A back-half ramp of that shape, guided up in the quarter revenue went negative in the home market, is the single largest disconfirmable claim in this name and it gets its first test on 10 August.

2.2 The multiple anchor — own history, with the regime problem declared

EV/TTM sales, built from as-known TTM revenue and as-known net debt (both lagged to filing date), shares held at the verified 231.46m so the series measures multiple movement:

The full-history and GLP-1-era anchors are declared UNIDENTIFIED for target-setting. They span a documented regime change: gross margin −14pp, revenue growth +59% → +3.8%, capital structure $323m net cash → $223m net debt, and the withdrawal of the legal basis of the largest revenue driver. A multiple observed on a 79%-gross-margin, 60%-growth, debt-free, unlitigated business is not an anchor for this one. Saying "2.50x is the 21st percentile, therefore cheap" would be exactly the error valuation.md warns against.

The usable anchor is the post-exit window, and it is declared thin: 104 sessions, five months, during which the name repriced violently on regulatory headlines. It is used because it is the only window measuring the current business, not because 104 sessions is a good sample.

2.3 The target

Applied to TTM-thru-Q1'27 revenue of $3,244m, net debt at the horizon taken as −$400m (current −$223.2m, less ~$240m Eucalyptus cash at close, plus modest cash generation; excludes the deferred Eucalyptus consideration and $89.7m of existing earn-outs, which biases these targets high):

12-month target: $34, +37% to spot

Anchored on the multiple holding at its current 2.54x — the minimum-assumption choice, and the 38th percentile of the only window that measures the current business.

Honest decomposition of the +37%, because the reader is owed it:

• +25pp is the underlying revenue build (TTM 2,370 → 2,906 ex-Eucalyptus, at a constant multiple).
• +12pp is Eucalyptus consolidation — revenue bought for up to $1.15bn and capitalised at 2.54x sales.
• 0pp is earnings. TTM EBIT is −$30.6m. This is a revenue-multiple target on a loss-making business, and it should be trusted exactly as much as that description warrants.
• It requires the multiple not to fall, while the news flow that took it from 12.61x to 2.54x is still arriving — the FTC sued today, the DOJ referral is open, the SEC investigation is open, and Novo may refile. The post-exit minimum of 1.57x gives $20.28, −18%. That is not a stress scenario; it is a level this stock traded at nine weeks ago.

2.4 Sanity band vs. the external professional target

The reference healthcare long/short book carries HIMS as a long at 0.8% of book, implied vol 97%, Sharpe 0.90, on a +88% target. My +37% is 51 points below it.

Reconciliation, not calibration — per valuation.md, an external target is a check on the output and never a target for the model:

• +88% is $46.40. On my $3,244m NTM revenue base that requires 3.47x EV/sales — the p90 of the post-exit range. It is therefore achievable inside the observed range: this is not a difference of arithmetic, it is a difference about the multiple.
• To get there the multiple must expand 37% from here, which requires the enforcement overhang to lift — the DOJ referral closing without action, the FTC suit settling cheaply, Novo not refiling, and the §503A peptide pathway opening. Each is a discrete binary, none is dated, and one of them (the FTC) resolved against the company today, twelve days after the reference position was presumably struck.
• The reference book's 97% implied vol is independently corroborated by the pulled option chain: Jan-2027 ATM IV is ~93%, realised 252-day vol 89.6%. The vol input is right; the target is a view.
• The +88% target and the 0.8% position size are the same statement. A professional expressing +88% at 0.8% of book is expressing low confidence at high convexity, not conviction in a base case. The Sharpe of 0.90 is a ratio on a very small denominator. Read that way, my +37% and his +88% are not far apart in expected contribution to a book — and that is the number that matters.

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Part 3 — What would change the answer

The last row is the one to watch. A company that will not size its largest exposure, and that is narrowing its disclosure cadence in the quarter that exposure broke, has made the durability question unanswerable from the outside. INDETERMINATE-by-construction on the central question is itself the finding, and it is why size should be capped irrespective of the valuation margin (see HIMS_Trade_Construction.md).