$HIMS：Paul Cerro 不会放心让 CEO 替他遛狗，但仍然看多。为什么？| Cedar Grove

You're about to listen to the another value podcast with your host me, Andrew Walker. Today I've got Paul Cerro on for the second time. Paul runs Cedar Grove Capital and he has a thesis on Hims. The ticker is Hims. I'll include a link to the ticker in to his write-up in the show notes, but he's got a thesis on Hims and he has—it's a really fascinating conversation. I just did it. I really enjoyed it. I learned a lot. I think we had a really good banter, but he's got a really deep expertise here. He used to work for a Hims competitor, so he's got actual sector expertise, and this is his third time he's written up, gone traded, kind of quote-unquote traded, the stock. He went long the stock to great success. He went short the stock to great success, and now he's long the stock again. So we're going to dive into all of it. We're going to talk competitive outlook, valuation, all sorts of stuff. I've got a lot of questions. It's an exciting story, but I think you're going to hear Paul share some of his skepticism. I don't think I'm saying anything like questions on management, questions on ad backs, everything, but I think it's a really good conversation. I think you're going to enjoy it. So we're going to get there in 1 second, but first a word from our sponsors, and I'll just dive into the sponsor advertising right now. This podcast is sponsored by Him. It's Hims. This podcast is sponsored by Trada. If you've been listening to this podcast for a while, you know I'm always pitching Trada, and there's a reason. I love Trada. Trada is two buy-siders who hop on and talk about a stock that they are both invested in. Sometimes you'll have someone who owns the stock and someone who shorted the stock. Sometimes you'll have two people who own the stock. Sometimes you'll have two people who short the stock, but they'll actually be talking about what matters for their investment thesis on the stock: what drives the stock higher and what drives the stock lower. And hey, here's the great news. Well, there's two pieces of great news. Number one, Trada now has an MCP, so if you are working with your favorite AI agent and you say, "Hey, I'm researching this company," you can just say, "Go pull the Trada transcript and tell me what other investors who are looking at this transcript are thinking about." So it's one of the first things I do every time I'm looking at a company right now. But B, the other great news is Tratta has, if I am going to count, 1, 2, 3, 4 different transcripts on Hims. All of them are less than a year old, including one that is roughly a month old. So they've got a lot of coverage on Hims. If you're interested in Hims, you should listen to this podcast. You should go read Paul's note, and then you should go on Tratta, follow the link in the show notes, and go read Tratta's Hims coverage. And I think I'll be able to convince Tratta to give me the most recent Hims coverage that they have as a kind of free trial if you follow the link in the show notes. But thanks again to Tratta for sponsoring this podcast. If you like this podcast, you will love Tratta. Tratta t r a t t r a t a dot com. Go check it out. And now to the podcast. All right. Hello, and welcome to the Yet Another Value Podcast. I'm your host Andrew Walker, and with me today for the second time, I believe, it is Paul Cerro from Cedar Grove. Paul, you're just a man of—I've got as I was joking before the pod, you've got an empire that resembles my own over at Cedar Grove. You can tell everybody what you're into, but how's everything going, Paul? Quick disclaimer to remind everyone: nothing on this podcast is investing advice. There's a full disclaimer at the end of the pod and in the show notes if you want it. Paul, the company we're going to talk about today is Hims. I'll include a link to your most recent write-up in the show notes. I'm laughing because I say “most recent write-up” because I follow Cedar Grove, and I know you've been long, you've been short, and now you're long again.

Not to spoil the plot or anything, but I think that history is really interesting when people think about it. There's the old sell-side thing: when somebody does a double upgrade or a double downgrade, those are the analysts you really pay attention to because you're thinking, “This guy was bearish, and something has changed.” Those are the types of double upgrades and downgrades that move the stock a lot of times, just because you're thinking, “This guy was bearish, and something has changed.” For you, you were bullish and right, then you were bearish and right, and now you're bullish again. So, that's my overview. I'll toss it over to you: What is Hims, what is your history with it, and why is it so interesting?

Absolutely. I think I have my own little disclaimer on this because it's a special situation—not trade-wise, just for myself, a special situation. Full disclosure: we are long the stock. In a previous life, I did work for their competitor, Ro. I have not been with the company since January 2022, so I have no affiliation. I don't know anything that's going on over there outside of the headlines that we all see. My knowledge comes from being able to build this business, or help build this business, and then translate that into an investment in Hims.

Pause you right there. I noticed that in your report. I think that's super interesting background, too. It's not quite Leopold over at Situational, working for OpenAI, and then marrying the chief of staff of Anthropic, but you've got industry contacts, industry background, and probably still some friends in the industry. I'm not saying it's MNPI, but you get some color and some background. I just think that adds to a level of expertise. So, Paul, I'll stop you right there.

I'm actually glad you said that because, obviously, whenever you try to hear anybody's thoughts about a company, you should understand: What's your credibility and your knowledge there? I always try to tell everybody, listen, I'm not saying I'm the perfect person for it, but my experience has been that I have helped grow this business. I probably know it better than anybody on Twitter who is not building it themselves or has built it themselves.

I'm not just pulling this information out of thin air; it's because I've done it. When I speak, I think it comes from an experiential background, which is why, as you alluded to earlier, we did make our first investment into Hims in 2024. That whole premise was around the future of what telehealth was going to be and who were going to be the biggest players in it, with Hims being one of them.

The thesis revolved around foregoing insurance and opting in for cash pay because the U.S. health care market is just bananas for how it's being run. I don't think anyone's going to debate that at all. A cash-pay system basically disrupts the entire thing—the entire modality of how you see providers, how you get billed, and how you pay.

Why don't you just quickly describe the cash-pay system so we're not tossing out terms?

Right, sorry. Most of the American health care system right now is insurance-based, whether it's employer-sponsored insurance through your employer, insurance through the government, or you pay out of pocket for the insurance if you're just a lone person or a single-member LLC or whatever. You pay for your own insurance. Otherwise, the unfortunate thing there is that you're kind of out of luck.

Then you have to pay out of pocket, which is why people forego even calling an ambulance to go to the hospital, because that's a $2,000 out-of-pocket cost, and it's like, “I'd rather take a $50 Uber and roll the dice.”

Do you know? I was playing an intramural sport once, and somebody hit their head and cut their head. It wasn't life-threatening, but they called an ambulance and they brought him. Everybody was joking afterward: “This is the most expensive intramural game of all time that you just racked up a $2,500 hospital bill playing a 30-year-old rec-league game.”

Yeah, it's so sad that that's the state of things, but unfortunately, that is the state of things. Because so much is wrong with the American health care system, I guess, on the insurance side, being able to disrupt it by paying cash only for things—arguably, depending on who you talk to—could be a better alternative.

Players like Hims and Ro are effectively trying to prove that, hey, with a cash-pay model—meaning I don't have to deal with insurance; I open my wallet and pay with cold, hard cash—I can get things for cheaper, whether it's drugs or services. It could be cheaper if I did it that way than if I went through my insurance. And that's basically a disruption of cash-pay telehealth.

Okay, so let me unpack that. Why would that be the case? I understand you go to Hims and you get $135, but my insurance is often paid for by your employer, right? And there are taxes—

For that and everything.

And then the insurance thing: I go to a hospital, and every time I go to the hospital, I have a bill. I had a peptic ulcer a couple of years ago, and I had to get it repaired. They hit me with the bill, and it was like $20,000. Then it said, “Your health insurance negotiated the price from $20,000 down to $2,000.”

Now, I understand that if I went to the doctor and said, “Hey, I’m going to cash-pay for this surgery,” I could probably negotiate the price down. But why wouldn’t the health insurance company—we’re going to be talking about GLP-1s in a second—that goes to Novo Nordisk and says, “Hey, I want to negotiate the price for Wegovy for 5 million health insurance members,” get a better price than you or Hims going to them and saying, “Hey, we want a cash price. We can’t even tell you how many people because we need to go to market, get them on Instagram, and bring them in here”? Why would that create a discount?

Yeah, because I think the way the system is set up right now is actually rewarding inefficiency, at least in the American market. There are a lot of points within the health care coverage and servicing journey that, in my opinion, don’t need to exist, but they do. It’s almost like everybody needs to get fed; everybody’s beaks need to get wet. When you have incentives aligned around, “How can I maximize my own profit?” each one of those barriers is going to be like, “No, you have to pay the toll, and then we can negotiate so-called things.”

A very easy example related to your question is that when you go to a hospital, get sick, or go to an emergency room, you get the bill in the mail: “Your insurance negotiated down from $40,000 to $30,000.” You’re like, “Wow, my insurance is working for me.” But if you just talk to the hospital and actually negotiate with them, then all of a sudden the cash-pay alternative is dramatically less. It’s not even $30,000 anymore; it could be $5,000, it could be $2,000, et cetera.

There’s this wide disparity of everybody trying to bilk insurance because, first, they know they can, and second, they know they can get massive premiums on their services and drugs in order to make a living or whatever. That’s why the cash-pay alternative is like, “You know what? Screw all of that.” I hate saying this, but the easiest analogy is almost like Walmart’s everyday low price: We can make it a cash-pay alternative and say, “You don’t have to worry about the insurance, who or what insurance you have, what kind of insurance you have, or what state you’re operating in. This is going to be a flat price. This is the price.”

That’s what I think is interesting. It’s kind of a remarkable thing.

Hopefully listeners have a good overview of the cash-pay model. Let’s go back to Hims. In 2024, you came into them long, thinking, “Hey, cash-pay revolution.” Let’s go back a little bit through the history, and then we can bring it to today and the opportunity right now.

In 2024, I actually invested in it before all the compounded GLP-1s even happened. I was like, “I know exactly what this business is. I know exactly what it’s trying to accomplish. I know how it’s going to accomplish it.” Ever since they went public through a SPAC, they’ve shown that they can slowly generate cash, become profitable, and that, with scale and better unit economics over time, that trend would continue.

Then, of course, you get the benefit in 2024 when they launched compounded GLP-1s, and most people know that story: It just exploded in growth. We were very happy in 2024 because we knew what the end goal was, and we knew what the trajectory was going to be.

Our problem arose as early as August 2024, after the Q2 earnings call. I always knew that the compounded GLP-1s had an expiration date because it’s a loophole. You exploit the loophole for as long as you can, and then it’s game over.

It was a loophole, just for people who don’t know. If a drug is in shortage—if the FDA declares a shortage—you can start compounding the drug and basically go around patent law, right? I believe what you’re referring to is that sometime around then, the shortage was declared over, and the FDA said, “Hey, all you compounders, time to stop compounding because there’s patent protection here.” You can go anywhere you want with that, but just so people know the background.

Exactly right. If you have a shortage, other pharmacies that technically wouldn’t be allowed to make this drug can legally circumvent those rules and fill the gap in demand by increasing the supply of a drug that is obviously in shortage. I knew there was an expiration date, but then Andrew, the CEO, said, “Yeah, I think even after the shortage ends, we’re still going to keep making it.” I’m like, “Wait a second, back up, because that’s not allowed. You can’t do that.”

To avoid having to go through that whole rabbit hole, in January 2025, through our own research—which we flagged to everybody who read our work—we were like, “There is a massive problem brewing.” There was no more shortage. We did research where we talked to pharmacies in, I think, 18 different states and 32 cities. We could get the drug either the same day or the next day. The worst-case scenario would be that we’d have to wait a couple of days. That is not grounds for a shortage anymore; it means that the drug is readily accessible.

We put out our research: “This is a problem. This shortage is imminently about to end, and once it ends, the party’s over for compounded GLP-1s.” Long story short, the FDA ended the shortage in the third week of February 2025. Everybody was trying to time when the shortage would end, so the stock went from $25 to $72 a share. Then it immediately crashed after that.

Throughout the year, I kept saying, “Listen, they’re over-indexing to GLP-1s. This business is reliant on GLP-1s. The whole growth is basically coming from GLP-1s. The core business is slowing down; it’s decelerating.” Either they need to pull some rabbits out of their hat, or they have to keep doing this arguably noncompliant prescribing of GLP-1s.

I mean, you would know better than me, but I think the FDA wasn’t too happy with them. I think that’s great background. Why don’t we fast-forward to today and the opportunity you’re seeing? People can read the report, but you are now long, and I think you see the business inflecting from GLP-1 reliance into a completely new model. Why don’t we fast-forward to that?

Absolutely. We covered our last short trade at the end of Q1 earnings this year. Once it broke $14, I was like, “Okay, victory lap.” I took it, and then the litigation risk was effectively subdued. Once Novo Nordisk sued Hims for IP infringement and then they worked out some deal, that kind of went away. I’m not saying it’s gone forever because they dismissed the case—I believe without prejudice—so they can bring it back if Hims steps out of line.

What I was bullish on in 2024 is still happening now, just in a different way. Many bulls and analysts are focusing on Hims’ ability to market and dispense drugs efficiently and effectively. That’s not wrong, per se. The problem is that the emphasis on that is wrong, because the whole reason this business exists is that they can market very well to you, to me, or to some 50-year-old person sitting at home on Facebook. That is the table-stakes part of the business. If they don’t continue doing that, then there’s no business to be had.

When they talk about the peptide launches, testosterone, or the generic GLP-1s in Canada and the UK, it’s like, “Okay, great. That’s all great. It’s a net positive.” But they need to do that. It’s not a miss; it’s a must.

My point is that everybody’s missing what the actual play here is, which I believe started with them offering lab services. The company has not had an issue getting customers; it has had an issue keeping customers. That is where they’re bleeding. If you look at the subscriber numbers over the last 3 quarters, they’ve barely grown, relatively speaking—and that’s after having a blockbuster year.

My point was that having data and insights through various forms, which they are actively already working on, is not a pipe dream or a hypothetical. They’re already doing it. That’s where the value is really going to be coming from.

Because if they can improve patient outcomes, if they can improve the data points so that these customers retain better, right? Or are more active, more engaged, feel more heard, and get acknowledged as unique individuals, they will stay on. That increases their LTV, it dramatically reduces their payback period, and it's a scalable product not just in the domestic market, but internationally. That is where I think everybody fails to realize where the value is, and not necessarily just them launching new products, because that's a given. They need to do that.

Perfect. So, if I'm hearing you correctly, what you're saying is, “Look, the market is really excited and really focused on this, basically, GLP-1 dispenser, or whether it's peptides or whatever.” Hims has in their deck—I think it was slide 28—their payback period to acquire a customer when they market online, or however they got them, is about 6 months, right?

So, the market is just really excited. They've got this really fast, really short-term payback period. We grab customers, we get them in the door, and we're really profitable. And what you're saying is, yeah, that's great. A payback period of 6 months, and if the average customer lasts a year, you're basically doubling your money. That's awesome. But, as you're saying, that's a really high-churn business. And the problem with high-churn businesses is that they run into a growth problem when they start churning a lot.

You're saying the real play is that they get that person in the door and say, “Hey, we get the data, we get your lab,” and all of a sudden that 1 year goes to 2 years, goes to 3 years, goes to a lifetime, because they say, “Hey, we've got your lab data from when you were 25, 30, 35.” By the way, that's also a great business because you come in and get your labs and say, “Hey, I want testosterone.” I think it's kind of their third or fourth store right now. “I want testing for testosterone.” Then 3 years later, they say, “Hey, how about cancer? How about cholesterol?” They start adding it up. So, is that kind of the transformation and the inflection that you're seeing that you think the market's missing?

Yeah, absolutely. Because if you look at even—okay, forget Hims for a second, because it'll loop back into Hims, but it's important to understand what the market landscape is. I know you do excellent work when you look at the market.

You can see—there are people on the video. This is where I was going to drive the next question, to see if you see where I'm going.

Yeah, so, self-punt to that. But you look outside the market. When you look at VC funding and where it's going, right? In 2020 and 2021, it was all telehealth. If anybody was doing telehealth—if they were doing anything online with a provider—VC money just threw money at you.

However, if you fast-forward to today, when people ask me, “What's the moat?” it's actually really hard, because everybody can just start it. The guy who was in The New York Times for MedV, right? He's a one-man compounded GLP-1 business who was making, what, like $1 billion in revenue and like $60 million in profit. Granted, it was completely fraudulent, but this goes to show that literally anybody or any group of people can just start up a business, target a certain condition, and boom, there's a new telehealth company.

So, what I was arguing for is: look at the market, look where the money's going. Right now, it's all data. I mean, there's still some condition-specific investment, but the focus is on data. Devices such as your Whoop band, my Oura Ring—which I'm not wearing right now; I should—and other devices can track your data and not only give you insights, but also potentially give you curated recommendations for what you could do and what you could improve on. They can also give you a look back of, “Oh, yeah, how did I feel 6 months ago? How has my sleep progressed since then?”

Before we jump in, there's 1 company that I was so shocked to read about. They're creating a toilet seat so that, when you have bowel movements, I saw—yeah, yeah, yeah, yeah—they can track basically your waste or excrement that comes out and tell you how healthy it is based on your gut biome. I'm like, that's nuts, right? So, data is actually one of the biggest areas of VC investment right now, and for good reason.

So, let me—there are 2 angles to push back. I wouldn't go out there, right? Actually, there are 3: valuation, transformation, and management. Let's start with transformation, because I think it's the more interesting and fun one, right? What you're saying is you've got this business that, let's just say, sells GLP-1s, and I think these guys are going to just crush it in peptides when peptides are legalized. Though, we can talk—there are questions there, right?

You've got this business that sells to customers for 1 year to 18 months, makes great money off them, all this sort of stuff, selling branded drugs, off-brand drugs, compounded drugs, whatever it is. You're saying, “Hey, I think they can transform, ladder up into this long-term data business that gets a lot stickier.” And I hear that, but I worry that it's such a transformation. We mentioned Whoop and Oura Rings. Whoop and Oura Rings are trying to do that, right?

You mentioned data is the key. Whoop and Oura Rings have the data, right? My Whoop has literally every second of the day—I think they argue it's 100 times per second—they're tracking my heartbeat, and they have all this data, and they're always pushing me to do measurements, put my weight in, everything. And I hear you. I'm sure Hims will probably try to do that, but because I interact with the Whoop, and I need to record my workouts on it every day and all that sort of stuff, Whoop has that daily interaction with me, and they have unique heart-rate data that no one else has.

So, my 2 pushbacks to Hims would be: they don't have that wearable like Whoop and Oura have. Whoop and Oura have the wearable, and they have unique data from that. Whereas what Hims is trying to do is get it in through labs, right? Blood-work labs. And that's a lot more commoditized. A lot of people can get that.

I mean, Whoop is always saying, “Hey, Andrew, send us your blood work.” And I have not done that, per se. Then the other thing is on the wearables: I would not invest—I love my Whoop, but I would not invest in the Whoop round—because I hear you on unique data, but on my other wrist, for those who are on YouTube, I've got my Apple Watch. Apple Watch does take your health data; it does take a lot of this data.

And if you're WHOOP, you're always betting that, “Hey, we'll be able to keep a longer battery life or offer convenience or something that Apple will just never attack.” I don't know if that's a great bet for WHOOP. So, my 2 pushbacks to you would be: “Hey, they're trying to go into this data play, and that's what you're kind of saying the inflection is. I don't see what's unique about their data play. With WHOOP, I at least see where the uniqueness is there.”

And B, aren't you always at risk—even if you say, “Hey, they can figure out a way”—of Apple and Google on the other end coming in? These guys aren't the only ones; Amazon is clearly dabbling around in this place. They've got a lot of different telehealth plays. Aren't you at risk that, oh, you unlock it and, boom, a giant swoops in and kills them? So, that would be my pushback on the transformation angle. There's a lot to unpack there, but—

Well, that's why it's the most interesting and the most fun piece of the story, right? No, it is, because you're betting on what the future actually is going to be and who basically wins in that future. If you're right about the future, then who wins with that reality?

So, a few things to unpack. First, I would agree with you: the WHOOP device—I think it was last valued at $10 billion. They were valued at that, I read that, and I'm like, “What?” I just didn't make heads or tails of that. So, either somebody knows something that I definitely don't, or people are just so willing to pay a premium for that company based only on a wearable device and the data, because they don't do anything else. And it's actually really interesting. I don't know if you caught this when you said it. You said, “I have a WHOOP, and it reminds me all the time to upload my lab results.”

No, no. The WHOOP—if I open it, every time I open it, the first thing it says is, “Hey, go get labs,” and they want you to pay for the WHOOP Lab and get the blood test and send it to—

Oh, good. Okay.

It always tries to get me to send it to them, and I'm like, “I don't really want to pay $200 for you guys to get my blood test right now.”

Yeah, so here's my pushback on that: all the wearables with their data are moving—I don't know if that's upstream or downstream. Maybe it's upstream in order to get health care data and then be able to recycle it into their own system. Where my argument against your pushback is that, if you're already with a platform that handles all of your medications, arguably you would probably want to stick with that place for all of your prescriptions, all of your provider access, all of your follow-ups, et cetera, and then be able to somehow—I don't know how it would work.

Somehow, have some kind of API plug-in with a WHOOP device, an Oura Ring, or something where it can sync, or something where you can manually update it.

The bear case on WHOOP is that Hims does that. They just say, “Hey, we’ll take the data off your Apple Watch, and you don’t need the WHOOP subscription,” right? You just get the Apple Watch data; we plug it in via API, and boom, you’ve saved—I think WHOOP is about $250 a year.

I can’t remember what it pays. It’s decently priced.

Yeah, we’ve just cut you out of $250 per year, and we’re combining your medication and all this sort of stuff.

But there’s a caveat there, too, because I’m not sure if you remember, but when Fitbit came out, everybody was going crazy—I even had a Fitbit. Everybody was going crazy about Fitbit because you could track all that stuff on your wrist. I think it actually rose to a $9 billion or $10 billion valuation on the public markets.

What ended up happening was that Apple released its Apple Watch, and everyone was like, “Oh, a smartwatch is just going to kill this health-centric fitness watch,” which it ended up doing. Then Google bought them for about $2 billion, I think 6 years later or something.

That’s why the WHOOP is—

Sorry—didn’t we see this with Fitbit? But this is more—

Yeah, and there’s more nuance there, but what’s actually interesting is that you’re saying, “Okay, so they’ll just come in and kind of displace somebody else.”

Very recently, I think 2 weeks ago, Apple lost a lawsuit to Masimo because, according to the lawsuit, it effectively infringed on Masimo’s IP for a pulse oximeter. Masimo said to them, “You can’t use that. You didn’t pay us.” And Apple was like, “Well, with our own technology,” blah, blah, blah. They lost.

So many of these companies are trying so hard to get you to buy their product with the intent of what value it can provide, and then go on to step number 2, which is, “How do we expand on that?” That’s what they’re already doing, right? For wearables, as you said, WHOOP has labs. Lab companies like Function Health are moving into supplement tracking and at-home blood tests, et cetera. Everybody knows they need to expand out, which Hims is doing, but just in reverse.

I’ll put the Masimo thing aside for a second, because I do remember that. I think they stopped the shipments for a while, and then I think this was the appeal. But let me go to the valuation.

Yeah, it was. Yeah.

The future is unknowable, and it’s interesting to think about that, but let’s assume you’re right and they kind of win the future, right? Let’s talk about valuation here.

Right now, as we’re sitting here, I’m just glancing. I think Hims is about a $7.5 billion EV. You can correct me if I’m slightly off. The stock is about $31 per share—about a $7.5 billion EV.

EV is a little bit higher now, but yeah.

There are some converts and everything, and they’re—

Of the converts. Yeah, it’s because of the converts.

Completely okay. We can round to $8 billion, whatever you want. They have given out 2030 targets of at least $1.3 billion in EBITDA. That compares to—I think their 2026 targets are a little over $300 million of EBITDA.

So, on a 2026 basis—the year we’re in—you’re talking about approaching 30 times EBITDA. On a 2030 basis, you’re talking about 6 times EBITDA. How do you think about the valuation?

I’ll layer one more thing on. We were mentioning the WHOOP and Oura Ring, which, again, do have unique data and a wearable component. WHOOP just raised at $10 billion. When I’m looking at it, I’m saying, “Hey, the future upside—Hims is already kind of at $8 billion right now. If WHOOP raised at $10 billion, is there really that upside?”

Maybe it’s VC-style exponential upside, but that’s the other thing, apart from the EBITDA number, that was weighing on my valuation. I’ll toss a lot there and step back and let you talk to all of that.

Yeah, I’ve never been a fan of private-market valuations. That’s why, when it comes to IPOs, I love researching them because most of the time I end up shorting them. I think, “This is grossly overvalued. There’s no way this makes any sense.”

When it comes to private-market valuations, as I told you, when I heard that WHOOP was raising at a $10 billion valuation, I thought, “In what world is a watch worth this much?”

As my wife reminds me, it’s not a watch. It does not tell you the time. My wife loves to joke with me about it.

That’s very fair. I know, I know—that’s one of their marketing points. But yeah, I sit there and I’m like, “Okay, that doesn’t make any sense because you have a business right now with Hims.”

Mind you, I am hypercritical of Hims. You’ve seen this. If they’re wrong—

Management is the third point. We’ll talk about it in a second, yeah.

Yeah. When it comes to valuation, I’m looking at what the market is actually willing to pay. Someone is wrong in that equation: either WHOOP is being overvalued at a $10 billion valuation, or the market is pricing Hims wrong at an $8 billion valuation. One of those 2 has to be wrong.

My opinion is that the Whoop valuation is strong, so I don’t use it. I think Oura did something similar, too, and I’m like, “Okay, that doesn’t make any sense either.”

When management gave out long-term targets—2030, $6.5 billion in revenue, and at least $1.3 billion in EBITDA by the end of 2030—they gave that out, I think, in May of last year, 2025, and I read that and I was like, “What mythical numbers are these, and where is he getting them from?” Because this doesn’t seem realistic in the slightest.

Mind you, this was before Zoba, and this was before Eucalyptus, so there was really no international business.

But then, as time goes on, you’re like, “The only way he actually gets there is because of the international business, not because of the American market. It’s because of the American market tied with the international business.” Now, when you look through the lens of international and the U.S., then I’m like, “That’s probably conservative, actually. That’s probably a very conservative number.”

When you’re talking about paying a 6-times 2030 EBITDA multiple, that’s still growing at a mid-teens, high-teens clip on the top line. Then things start changing. It doesn’t actually look too crazy anymore.

Obviously, there’s a lot of execution risk in there because the rules, regulations, and compliance—whether it’s in the EU, Canada, Brazil, or Australia—are all very, very different. So, there’s a lot of execution risk involved in there, but valuation-wise, you have to either believe that he at least hits what he thinks he’s going to hit, which is still not dumb cheap.

But at the same time, if you believe that the thesis holds, the data play is right, retention improves, and LTV goes up globally, then it’s not extreme in the slightest, in our opinion, right? Which is why we decided to go long the stock again this year.

Well, let me go to management. You mentioned management. I don’t think it would be an understatement to say you don’t trust them. There’s a Bloomberg Law article from 2025 where you’re quoted, and your quote says, “When you’re disrupting health care, you have to push the boundaries a little bit. The emphasis is on ‘a little bit.’ As soon as you cross the line, you end up going to jail.” Talking about some of the lines that they cross.

[laughter]

And in your report, you said, “Would I trust the CEO to walk my dog or plant-sit my cactus?” No.

So, I think it’s interesting. You’ve got this growth outlook that management is providing, and you’re basically saying, “Hey, I like everything about this company except the visionary founder CEO who started it.”

My 2 pushbacks on that would be, number 1, in my experience, every time I’ve had a management team lie to me or be proven wrong, I should have just sold the shares instantly, and I didn’t. I’d always explain it away. I’d be like, “Oh.” And every time I’ve had that happen, I’ve had my face ripped off. That’s just been my personal experience.

If I were applying that to Hims specifically, when I look at their 2025 numbers—I’m just looking at them—$317 million in adjusted EBITDA, right? But it’s pretty heavily adjusted. $130 million of the adjusted EBITDA is stock comp, $135 million is depreciation and amortization, and they add back investments in websites.

They do have a lot of investments into intangible assets and stuff, so that D&A number is kind of a real number. They add back legal settlements.

They add back; it’s a pretty adjusted number. So, when I say, “Hey, we’re modeling them on 1.3 billion,” we’re almost double-trusting management. We’re trusting them when they say they’re going to 4× their EBITDA, 3× their EBITDA over the next 4 years or so. And, B, they’re saying that’s heavily adjusted EBITDA, so we’re trusting them there, too. Does that make sense?

Oh, yeah, fair. Because the thing is, like you said, most of the time, whenever we talk to management, I imagine you’re the same way. My goal whenever I talk to management is, “How much are you bullshitting me right now?” Obviously, their job is to promote the company, talk it up, et cetera, et cetera—obviously without lying. But not telling the whole truth might not necessarily be the same thing as lying, right? So, there’s emphasis here and emphasis there.

That’s why I always ask when I talk to management. Mind you, I’ve actually never spoken to Andrew. Andrew, this will be fun for your listeners: When the company went public in 2021, I was very critical of the valuation, to the point where Andrew ended up blocking me because I was so vocal about the valuation. Then it dropped 90%. So, I feel like I earned my stripes back then, sir.

Anyway, yes, I don’t trust Andrew. I don’t trust Andrew because of everything stemming from the compounded GLP-1 fiasco that happened last year. In my mind, I’m saying, “This guy is very talented. He is very bright. He is very future-forward in his thinking.”

The problem is, I think, when a CEO is sitting at the top for so long that he thinks he can be untouched, he can do whatever he wants, and nothing can touch him. That’s why my short report last year was titled “The Teflon Don,” because nothing was sticking to this guy. I’m sitting there thinking, “This guy actually thinks he’s some type of god right now because no one’s going after him.” Eventually, that comes crashing down.

The reason why I made those comments is because I don’t trust him personally. But I do trust his business acumen when it is checked, which he got a reality check on in February of this year when he got sued, got hit by the FDA, got hit by the FTC, and got hit by—I think the SEC one is still going on. Novo Nordisk sued him, too. I’m like, that was his reality check. Now he knows that you actually can’t step out of line and not face consequences.

When it comes to our thesis, yes, I believe management can get it done, but management still needs to operate under the same rules. That’s why I made that comment in Bloomberg that people go to jail when you don’t.

Can I just—I don’t actually know if this is pushback or not, but a lot of what Andrew does—and I’m not an expert on the company, and I don’t know the guy—he did start a doughnut shop, which is near and dear to my heart. Have you tried the doughnuts?

I have not, no.

Maybe if they go on Goldbelly, we’ll get them shipped to New York and try them at some point, because I think you’re out in Brooklyn, right?

No, I was out in Brooklyn, but I actually moved. I go there every year now.

Okay. We’ll still maybe figure out a time to try some of them.

Let’s figure it out. Let’s figure it out.

A lot of what you’re saying—the Teflon Don, the reality check—reminds me of Elon Musk. Again, I don’t know if that’s a bull point or a bear point, because I remember people, after multiple things happened with Elon, saying, “Oh, he got his reality check, right?” Elon never had his reality check, but his stock has gone straight up.

So, when you say he got his reality check and he’s going to be checked, I don’t know if that’s a good thing or a bad thing. If he is Elon Musk, he’s not going to be checked. But, as you’re saying, Elon—the one place, I guess, he is checked is in the brain, neural wave, or whatever. There is a little bit of a difference between, “Hey, my reality check is I’m selling cars and I’m pushing the envelope on autonomous driving,” and if you start doing products.

One of the things with compounding is that compounding during shortages exists because people need drugs. But if you miscompound something, people die. You sell people infected drugs and stuff. So, I don’t even know if saying he got his reality check—and saying that a lot of this reminds me of Elon Musk—is a bull point or a bear point.

Well, here’s the thing: I say he got a reality check because of what ended up happening, not because he actually suffered any consequences from it. Hunterbrook was very vocal about how Andrew basically got away with compounding and paid no repercussions for it. I agree that is true.

I called him Icarus in 2024. I was like, “Icarus was able to fly around for as long as he could, but when you get too close to the sun, your wings burn up, you fall to the sea, and you die.” So, I called him Icarus in 2024. I called him Napoleon in February 2025, and I called him Teflon Don in October 2025.

His reality check is—and this is a 2-pointer here—one, that he got a reality check by effectively understanding how far he was able to push that gray area. He was basically creating his own drug out of thin air before everyone was just like, “Okay, nope. That’s it. You can’t red-line. You can’t do that.” Now he actually knows what the red line is.

We’ll see if he tries to push that again or if he knows he doesn’t have to get too close to it anymore. Secondly, as I mentioned before, you have to—most of this, I’m not saying it’s the Wild West. I mean, some parts of it are the Wild West.

But I think the Chinese peptides are—

Oh, that’s actually the Wild West. Yeah, for sure. So now, absent peptides, the repercussions are real, right? He also has to answer to them if people get sick or people die, which has been published before. But life continues to go on, like you said with Elon. His companies still keep going. Life goes on. Hims will continue to go on.

My reality check was that I put too much emphasis on morality. I thought that if you didn’t do the right thing, then regulators—the “police,” as I call them, the people who are supposed to be there for people—would step in and right the wrong. That’s why, all of 2025, I was saying, “All of this that he’s saying isn’t even accurate.” I was pointing out every little detail.

I’m very late to this game, but David Einhorn’s book, “fooling people all the time, some of the people all the time,” took 5 years before his short worked, and it was down like 90%. In one line, they said the excuse that nothing was happening was, “If my stock price is still high, then it can’t be fraud, or I’m not crooked.”

I’m like, “Oh, my God, that was all of 2025.” Everyone was like, “No, the stock price is at $60. You’re wrong.” I’m like, “That’s not how it works.” My reality check is that I can’t put faith in regulators to do the right thing. If they’re basically sanctioning that this is the red line, and not what the actual red line should be, then who am I to tell them otherwise?

It’s so funny, because everything you just said reminds me of a lot of the Tesla bears over the years. They’d be like, “He said we’d have robot taxes by 2018,” or, “He said there’d be 20 million cars,” and, “He was going private at $420.” Tesla has higher death rates when people get in car accidents because the doors don’t open. You would think regulators would be all over that. But regulators don’t care enough to get all over it.

Do you think it’s because of the FDA?

100%. 100%.

Let me go on a weird tangent with you for 2 minutes. You mentioned Chinese peptides a few times. For those who don’t know, if you go to Instagram—and I have not ordered them; I haven’t done peptides—you can get them. People are obsessed with peptides, and they’re not really approved here.

You can go on and get any peptides you want from Chinese laboratories. There are some that are very popular with fitness influencers and stuff. You probably know it better than me, and if this gets regulated, I think it’s going to get approved by the FDA pretty soon. It’s going to be a big bull case for Hims, in my opinion, because I think these guys are very well situated to take over the Instagram marketing and actually start compounding.

You can say anything on that piece you want, but I want to go on a weird, different tangent as well.

Yeah, yeah, I know. I think they’re valuing the illicit market at just under $2 billion right now.

No chance. It’s going to be so much bigger when it’s regulated, and I would be shocked if it’s only $2 billion, right?

Oh, yeah, yeah.

So, illicit is, I think, $2 billion, but once it goes legit, then it’s multiples of that. Which is fine. As I said, it’s a net positive. Great. See, again, I’ve had my reality check: I can’t be the morality police, because, number one, I’m not, and number two, I can’t rely on the morality police to actually come in and do their job.

My argument, too, was—I tweeted about that thread a couple of months ago, and I was like, “Everybody thinks I’m bearish on peptides, but I’m actually not.” If GLP-1s proved anything, it’s that people will want to get any drug that will help them if it’s cheaper or whatever, right? It’s why people still buy those, for lack of better words, Rhino power dick pills at gas stations, because whatever.

There’s apparently a specialized insurance market for insuring those horny goat weed pills and stuff they sell at gas stations. Sometimes they accidentally put cardboard in them, and sometimes they accidentally put other stuff in them. Apparently, there’s a specialized insurance market because they’re so low quality—who knows what’s in there?

But speaking of low quality, the weird tangent I go on with Chinese peptides is this: People are literally going on Instagram and ordering from these Chinese peptide labs, and there’s no quality control. There have been some investigations, and people order—I don’t know what the names of the drugs are—10 mg of retatrutide. Sometimes they’ll be like, “Oh, yeah, it’s actually 10 mg.” But sometimes they’ll be like, “When we thought we were drawing 10, it was 20 or 5,” which is a disaster. Sometimes they’ll be like, “We thought it was 10 mg of retatrutide, and it was 20 mg of this other drug,” right?

The weird tangent is, it’s made me think a lot about AI and, as AI agents spin up and price-shop for everything, how the world goes more and more frictionless. There was the Citrine thing that almost brought down the stock market, where they were like, “Hey, instead of ordering off DoorDash, I’ll just tell ChatGPT to order pad thai, and it’ll compare 15 different pad thai places, find the cheapest service to deliver it to you, and cut out DoorDash.”

I’ve been thinking about how, as the world goes frictionless, consumers are proving they’ll just go to Chinese labs and say, “Hey, give me $20 worth of the cheapest thing.” They don’t care about quality; they don’t care about controls. I’ve been really worried about the world as it goes frictionless with AI—if people will just inject anything into their bodies. I go and say, “ChatGPT, order me $5 of apples,” and am I going to get rotten apples and just stuff them in my body? I don’t know, but it’s the weird thing I’ve been thinking about.

Regulators are super slow to catch up to anything. Consumers have proven that they don’t care where something comes from as long as it’s cheap and they get access to it. People were buying GLP-1s off Groupon, dude. Groupon. Who does that?

I hear you on the cheap, but it’s one thing. The Groupon ones—were they getting the branded drug, or were they getting some weird—

Oh, no, they were getting some weird-ass—

Okay, it was a quote-unquote GLP-1. I can imagine getting cheap on a lot of things, and I’m a pretty frugal guy in general. But something you’re injecting into your body? Just being like, “Yeah, I’m going to go and get it from some random Chinese company that’s not FDA-approved, and so I—”

And that’s where the issue is. You and I approach this with logic and a rational mindset. A lot of people do not. That is why they’ll take research peptides from a guy they trust or a guy they know, right? And hope and pray that the guy they know or trust is actually getting it from another guy they know or trust. But there are so many breaks in that system of “Trust me, bro.”

You roll the dice because if I take BPC-157 and my muscles are recovering nicely, I’m going to keep doing it until, again, something where I’m supposed to draw 10 mg is actually 20 mg or 50 mg. I get some weird twitch in my arm, or my heart stops, or something like that, and then I’m rushed to the hospital and have to deal with it then. I mean, some of the investigations with people are like, “Yeah, I was taking it and doing nicely, and then I got a bad batch, and now I’ve got tingling in my foot for the rest of my life.”

But here’s the thing, Andrew. We’re talking about something that’s not even legal yet, right? There’s a problem, which is: What happens when you’re supposed to trust people who actually have a legal market and they still screw you over? I always bring up the poster child: what happened with the companies Done and Cerebral, which had access to controlled substances.

They were pushing ADHD medications, and they were effectively telling their nurse practitioners—their providers—“Listen, when people come in, basically do the bare minimum and push these drugs on people, even if they didn’t need them or whatever, because we’re making so much money, and we’re quote-unquote helping people, so we’re doing the public a service and just rolling in cash.”

What ended up happening? The founders got arrested and charged, and I think the most recent one got sent to something like 6 years in prison. So there’s an aspect of trusting people you’re supposed to trust, and then them breaking their oath to protect you, or whatever. There’s always a risk there, whether it’s legal or not.

This is why dentists and doctors—they’ve got such a sheen on them, and it is scary. As one friend who’s a dentist told me, “A dental license is a license to print money.” You tell somebody, “Hey, I need to fill that cavity,” and they don’t really ask. They say, “Okay, yeah, let’s fill the cavity.”

Let me use the Chinese peptides thing to push into competition from one other angle. We’ll use it on the low end, and then I’ll go to the high end. On the low end, peptides get legalized, and that’s a big bull case for Hims. But if all these peptides get legalized, Hims is somewhat regulated. Again, we talked about the management team being willing to push boundaries.

I do worry—and this would apply to Hims, Whoop, whoever you want—that because so much of it is going to be Instagram marketing and acquiring customers, if you’re a bigger player with some sort of reputation, you get outcompeted by a smaller startup player. Hundreds of smaller startup players, Instagram influencers, whatever, are going to work with people, and they’re just going to try to churn and burn. They’re just going to say, “Hey, we do a buzzy Instagram ad, we get people watching, we sell them, and we don’t care what the fuck we do, right? We’ll ship them fucking placebo sugar water, whatever it is.”

We’re just trying to churn and burn. Hims did that to beat a lot of the players who were kind of playing by the rules when the compounding went away. As you and I know and discuss, if Hims is going to be this big player, are they actually going to get outcompeted by 100 smaller, fly-by-night startup players that will say, “Hey, fuck it. We’ll sell them whatever. We’ll push the boundaries as far as humanly possible on peptides, whatever it is”? That kind of undercuts Hims’ ability to acquire customers. So that’s the low-end competition I worry about.

That’s a very fair point, and my pushback on that is: When I worked at Ro, I was working basically directly with the CEO at certain points. I’ll tell you a very quick story. We were trying to see where we could go as a company, and my job was to figure out where that would be. One of them was actually ADHD medication, and I was like, “Listen, I looked at the numbers. We can make a lot of money with this.”

I had just come from investment banking, so my whole job was, “How do I create value?” My whole mindset was, “How do I create value?” I was like, “We can make a lot of money with this.” Without skipping a beat, he tells me, “We’re not doing that.” I’m like, “Wait, what do you mean?” I had all the numbers, I had all the data, and he’s like, “Because it opens up more doors to actually hurt people than help people.”

He told me that as long as we do the right thing for patients, then we will win over the long term. The short term might get bumpy, but in the long term we will still win. I respected that immensely. I was like, “Oh, wow, this guy actually cares.”

So, to your point about all these little brands popping up and shipping peptides—placebo, real, fake, mixed, whatever—I mean, is it fentanyl? Who cares? Who knows? They might win in the short term, and that might disrupt or add some volatility to, if we’re talking about Hims, Hims’ stock price. But if they’re doing the right thing, over the long term, it will net out for them.

Because I hope regulators come in. An unfortunate aspect is that if somebody dies with one of these companies, then everybody gets sued and the whole thing becomes a mess. It will create some short-term volatility for the people who are okay with breaking the rules and laws in order to make some cash, versus those who are saying, “You know what? We should do the right thing because it’s the right thing to do.”

You know, I love that. Generally, I’m an optimist, but the tough thing in the long term is that if you’ve got a lot of short-term players who are eating into your profit line and destroying it, I do hear you that hopefully the good players win out. But the issue with the long term is that if the short-term players eat into your business—and you mentioned that sometimes you’ve got a great thing and maybe the time isn’t right, or maybe there’s so much competition, and so much of that competition is doing things the wrong way—your company might not be the one that actually survives and makes it there.

For Hims, if the next few years are just a blood sport of low-cost players, Hims never starts inflecting. Maybe the low-cost players get kicked off the market in 2027 or 2028, but then it’s 2 years later, and maybe a new startup comes in and attacks from a new angle. That’s my one thought. I’ll pause there if you’ve got anything, and then I have 2 more questions.

I will say—and maybe you agree with this—that it then plays into who’s better capitalized and whose balance sheet is better. If it’s a race to the bottom on price, then, arguably—and I’m not saying this is going to happen; I’m speaking hypothetically here—if all these new startups are basically saying that price is the determining factor for these peptides once they come online, then a well-capitalized business that is arguably a leader in the business can take its prices down in order to grab share and still have cross-selling opportunities.

That plays into the whole data advantage and the additional conditions that they can treat, and so on and so forth. They can play that short game. Mind you, it still hurts their profitability, but because they’re capitalized well enough, they can endure that short-term pain for a long-term return.

Very Amazon thinking, though. The issue is that Amazon had a big infrastructure advantage, and here I’m worried it’s going to be people outsourcing to Chinese labs and just running Instagram accounts. But I want to go to 2 last questions.

Yeah. First question: We are recording this—what’s the date? August 6. Hims reports August 10, and this podcast is generally not a “What are your earnings, bro? What are your outlooks, bro?” podcast. But we’re going to try and post this on August 10 because they report after hours.

It’s kind of hard to talk about. You can look at Hims’ volatility. Hims’ vol is 100 vol. This stock does move a lot on earnings. I hate to say something like, if this releases on August 10, it looks stale. But how are you thinking about the near-term earnings for a name with this much volatility?

I’ve been thinking about what’s already been publicly announced. They already gave guidance from Q1, but they didn’t incorporate Eucalyptus. Eucalyptus is now closed as of June. When you talk about this coming year’s 2026 guide, it will be updated, all else being equal, just for Eucalyptus.

You’re talking about a few hundred million dollars in revenue that they’ll recognize in 2026. It’s not profitable, so, assuming all else is equal, they’ll negatively revise their EBITDA guide down to compensate for that lack of profitability at Eucalyptus.

Then the game is: How well has a full quarter of the Novo Nordisk partnership materialized in their financials? Secondly, how well have the aforementioned labs business, testosterone business, and menopause business scaled since they launched in September and October of last year?

I feel like a little bit of that has already been baked into guidance, but who knows if there’s upside risk there? It’ll be very interesting to see. The easy takeaway is that guidance will be revised upward for revenue because of the Eucalyptus acquisition and its inclusion in the financials. EBITDA will then be adjusted downward because, if Eucalyptus is indeed not profitable and nothing else has changed, EBITDA arguably has to come down.

That’s my very quick takeaway, and then we’ll see what happens. But I’m still very comfortable with it over the long term.

Perfect. I have 1 last question, and I want to ask it just about competitors: CVS, Walgreens, and then you can also throw Walmart and Amazon into it a little bit. In particular, CVS and Walgreens have so many local stores and so many patients who are already getting prescriptions there. I’ve been a little surprised that there’s been no effort to get into this market.

As you think about CVS and Walgreens in the long term, do you think these companies are too cheap to ignore? Walgreens got taken out at a melting-ice-cube valuation. Do you think there’s any pivot there? Do you worry about them as competition? Do you think they could be partners?

If I were in charge of Walgreens—which I’m glad I’m not—or CVS, I would be thinking, “Hey, maybe I don’t want to compound peptides myself, but I’ve got a great customer-acquisition source. Can I take that? Can I start doing exactly what you’re saying with these companies? Maybe I partner with Hims, or maybe I partner with a dozen companies. Can I own the customer and have people do the back end, and win the market that way?”

Have you even thought about them, or are they such dinosaurs that they don’t matter here?

I would say they don’t matter. I think all the specialty pharmacies—the pharmacies within Kroger, Costco, and Walmart—and then the pure-play pharmacies like CVS, Walgreens, and Reed are all fighting each other in their respective markets, which are mainly insurance-covered medications. That’s where they’re fighting each other.

While there is some overlap with GLP-1s, whether they’re insurance-covered or cash-pay, I think that because Hims is focusing all its efforts on cash pay, there’s actually no insurance involved in the Hims model. For now, they’re okay and aren’t really bumping heads with those companies.

Could they work together in the future, whether through some type of customer-acquisition tool, referral system, or whatever? Yes, that totally can happen. But at this moment, I don’t think it’s really a threat. I think Hims and all the pharmacies are fighting their own battles on their own turfs, and they’re not even thinking about each other at the moment.

I suspect there’s also a little bit of the innovator’s dilemma—not necessarily the innovator’s dilemma, but take Walmart, for example. I think Walmart says, “Hey, we’re a trillion-dollar company. If there’s any gray area or anything when it comes to compounding, we just don’t want to touch it.”

I think Walgreens and CVS are melting ice cubes, and they should think about something else. But I just don’t think Walmart wants to get involved with personalized testing. Maybe that extends to, “Hey, we don’t even want the legal liability of being a partner with someone on this.”

Well, that’s on the prescription side. They even tried their own telehealth offerings and had to dial them back because they just couldn’t get them to work. So that kind of proves—

That’s just any pharmacy, right? They launched a terrible product.

Well, that too. But the thing is, look at their balance sheets. If they really wanted to figure it out, they have the money to do it, right? Amazon is trying to do it, and they have a lot more money to try to make it an actual threat. I think there’s going to be more of that before it remotely gets better for them.

Paul, this has been a ton of fun. I’m going to include a link for those of you who are interested, whether you’re listening on August 10 and getting excited for the earnings call or listening afterward. I think a lot of this will at least hold up for the next 6 to 18 months. I’ll include a link to Paul’s write-up in the show notes for those who want to get ready for the earnings call.

Paul, this has been awesome. Thanks so much for coming on. I really enjoyed this conversation, and we’ll chat soon.

Always a joy talking to you, Andrew. Thanks for having me.