Hims & Hers Health (HIMS) shares edged lower Tuesday morning after the telehealth company announced the completion of its acquisition of Australia-based Eucalyptus. The stock slipped 0.9% to $27.52 in early trading, reflecting investor caution despite the deal's strategic expansion. The acquisition, valued at up to $1.15 billion, adds over 850,000 customers and significantly broadens the company's international footprint.
Deal Details and Expansion
Originally announced in February, the acquisition package includes approximately $240 million in upfront cash, $710 million in deferred payments, and up to $200 million in earnouts tied to future performance. Hims said the deal enhances its presence in the U.S., U.K., Australia, and Canada, while extending reach into France, Germany, Ireland, Spain, and Japan. The company reiterated its long-term targets of $6.5 billion in revenue and $1.3 billion in adjusted EBITDA by 2030.
CEO Andrew Dudum emphasized the strategic significance: "The future of health isn't inside of a doctor's office." Tim Doyle, former Eucalyptus CEO and now senior VP of international at Hims, added that the best care is "local in its understanding and global in its ambition."
Financial Performance and Market Context
The acquisition comes amid a challenging quarter for Hims. First-quarter revenue reached $608.1 million, falling short of the $616.85 million analysts had projected. Monthly revenue per average subscriber declined to $80 from $85 a year earlier. The company forecasts second-quarter revenue between $680 million and $700 million, with full-year guidance of $2.8 billion to $3.0 billion.
CFO Yemi Okupe told Reuters that operating cash flow remains the company's "North Star" and expressed confidence in being "well-positioned for profitability in 2027." Morningstar analyst Keonhee Kim noted it may be too early for the recent Novo Nordisk agreement to show meaningful impact, with forecasts still hinging on further acquisitions.
Competition and Regulatory Landscape
The weight-loss drug market remains intensely competitive. In March, Novo Nordisk agreed to allow Hims to sell Wegovy and Ozempic after legal disputes over compounded GLP-1 medications. Reuters reported that Eli Lilly has taken a leading position in the weight-loss drug segment. Telehealth rivals LifeMD and Ro are also aggressively pursuing cash-pay weight-loss customers.
Hims faces significant execution risks. The company's outlook could change if it fails to integrate Eucalyptus effectively, retain key staff, expand into new regions, navigate healthcare and privacy regulations, maintain customer retention, or achieve its long-term goals. Any further decline in compounded drug sales would also weigh on results.
Broader Market Reaction
Broader market moves were muted Tuesday. The SPDR S&P 500 ETF dipped 0.1%, while the Invesco QQQ Trust edged up 0.1%. The Health Care Select Sector SPDR Fund dropped 1.5%, with Hims largely tracking the weaker healthcare sector. The stock showed little reaction to the deal closing, suggesting investors are focused on the company's ability to deliver on its international growth strategy and navigate U.S. weight-loss market volatility.
