Hims & Hers Health, Inc. HIMS
HIMS is an overvalued, commoditized ED/hair-loss e-commerce business masquerading as healthcare, with CPoM regulatory risk and new OTC Eroxon competition driving 25-40% downside to $5.20-$6.50.
Thesis
Hims & Hers Health (NYSE: HIMS), a $1.6bn market-cap telehealth e-commerce company, has grown revenue at 88% CAGR since 2020 primarily by selling generic ED drugs (>50% of revenue) and men's hair-loss treatments through asynchronous, check-the-box physician consultations. Spruce Point argues HIMS is not a credible healthcare company but a commoditized drug-marketing machine operating on shaky ground: its 'Friendly PC' structure likely violates state Corporate Practice of Medicine (CPoM) doctrine, its contract-physician network lacks exclusivity or continuity of care, and its third-party pharmacy supply chain (Truepill, ITC Compounding) faces DEA and FDA actions. The June 2023 FDA approval of over-the-counter ED gel Eroxon threatens HIMS's core franchise, while competitors Ro, Keeps, and Amazon Pharmacy erode pricing. Spruce Point sees 25-40% downside to $5.20-$6.50, with further risk if regulators act on CPoM violations.
SCQA
Hims & Hers, a $1.6bn telehealth e-commerce company, grew 88% CAGR selling primarily generic ED drugs and hair-loss treatments through asynchronous online physician consultations, framing itself as healthcare's 'front door.'
HIMS's 'Friendly PC' structure likely violates state Corporate Practice of Medicine doctrine; third-party pharmacy suppliers face DEA/FDA actions; newly FDA-approved OTC gel Eroxon undermines the prescription ED franchise that drives >50% of revenue.
Short HIMS: the premium revenue multiple (2.0x vs 1.4x e-commerce peer average) should compress as regulatory risk, OTC competition, high churn, and rising customer-acquisition costs force a rerating toward commoditized e-commerce peers.
25-40% downside to $5.20-$6.50 per share from $8.67 current price, with further downside if state or federal regulators act on Corporate Practice of Medicine violations.
The three reasons
- 1
HIMS 'Friendly PC' structure likely violates state Corporate Practice of Medicine rules
- 2
New FDA-approved OTC gel Eroxon threatens >50% of HIMS revenue from prescription ED
- 3
HIMS trades at 2.0x sales premium while churn, CAC, and competition deteriorate
Primary demands
- Short HIMS shares targeting $5.20-$6.50
- Regulators should investigate HIMS for Corporate Practice of Medicine (CPoM) violations
- Investors should reject management's 'healthcare company' framing and price HIMS as a commoditized e-commerce peer
KPIs cited
Pattern membership
Precedents cited
- Spruce Point Oatly short (2021) — celebrity-endorsed promotion, -93% since report
- Spruce Point Nuvei short (2023) — celebrity endorsement masking troubled business
- Spruce Point FIGS short (2022) — commoditized growth story, -47% post-report
- Spruce Point HSKA short (2021) — pandemic-beneficiary healthcare story
- Spruce Point PetIQ short (2019) — questionable growth claims
- Cerebral — troubled telehealth co-founded by HIMS's original medical director, subject to DOJ/FTC investigations
Composition what's on the 105 slides
Slide gallery ·
Notes
Classic Spruce Point short-report format: provocative cover image (back of bald head tattooed 'STOCK PROMOTION / Sell, Sell, Sell' with skull-and-crossbones), track-record opener citing prior shorts (Oatly, Nuvei, FIGS, HSKA, PetIQ) as precedents, dense multi-section thesis (CPoM regulatory risk, quality-of-care, pharmacy supply chain, competition, failed growth initiatives, CAC/churn, governance, valuation). Short position disclosed in boilerplate disclaimer but no stake size. Stakeholder asks are implicit (short the stock) rather than activist-style demands. Strong CEO-quote-contradiction slide (p.99) juxtaposing Dudum's public claims with reality. Downside case framed both as a base case (multiple compression to $5.00-$6.62) and a tail scenario (regulatory action). Primary catalyst cited: June 9 2023 FDA approval of Eroxon OTC ED gel.