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Tag Archive for: (NVO)

april@madhedgefundtrader.com

Telehealth's New Weight Class

Biotech Letter

Clinging to Mount Everest at 20,000 feet, fingers numb and oxygen tank hissing like an annoyed cobra, I had an epiphany that would later serve me well on Wall Street: the most promising paths aren't always the obvious ones — they're the routes that quietly keep you alive while everyone else is busy with their cameras and guided tours.

That same principle is quietly guiding Hims & Hers Health (HIMS) right now.

While the market obsesses over their new Wegovy partnership with Novo Nordisk (NVO), sending HIMS stock jumping 25% to $35, savvy investors should look deeper.

The company isn't suddenly becoming a weight-loss play — they're eliminating doubt and positioning themselves at the center of healthcare's digital transformation.

This reminds me of a pattern I've observed across decades of tracking successful businesses and leaders. The most effective ones don't chase trends. Instead, they position themselves to win regardless of which way the wind blows.

I witnessed this firsthand during a memorable interview with Deng Xiaoping back in the late 70s. Despite the chaotic economic landscape he inherited, his focus remained steadfastly on fundamentals rather than fleeting opportunities.

That's precisely the Hims playbook with these GLP-1 partnerships.

Fascinatingly, they're charging $599 monthly for Wegovy — $100 more than Novo's direct offering.

In my decades managing hedge fund portfolios, I've learned that pricing power is the ultimate business aphrodisiac. It signals you have something people genuinely value enough to pay a premium for.

Wall Street, in its infinite wisdom, is once again squinting at the wrong spreadsheet.

Hims projects $2.35 billion in 2025 revenue, with $725 million from weight management alone — a forecast that completely excluded branded GLP-1s. Their core business in sexual health, dermatology, and mental wellness already generates $1.2 billion annually.

That's 83% of revenue from decidedly non-injectable sources!

Their growth figures are impressive, too: 60% projected sales growth and 70% adjusted EBITDA growth. Yet HIMS trades at just 3.5x 2025 revenue estimates.

If I pitched you a company growing this fast in any other sector at that multiple, you'd think I was selling oceanfront property in Nebraska.

But what truly separates Hims from competitors is retention. Their internal data shows 70% patient retention after 12 weeks, compared to 42% in standard clinical settings. Their users interact with providers three times more frequently in the first month and five times more over three months.

That's not marginally better — it's an entirely different universe of care.

Like those guerrilla fighters I once interviewed in Southeast Asia, who held territory against superior forces by knowing the terrain better — Hims isn’t just in the healthcare war, they know exactly where to strike.

The stock previously touched $70 after posting 95% year-over-year growth in Q4. It retreated on fears about GLP-1 access that were largely imaginary.

Now it's climbing again on news that merely confirms what company executives already knew: their business model doesn't hinge on any single medication.

This situation reminds me of trading Japanese equities in the late '80s—watching rational people make irrational decisions based on incomplete information. The market is simultaneously overvaluing the importance of GLP-1s while undervaluing Hims' overall growth trajectory.

With $300 million in projected 2025 adjusted EBITDA (13% margins), expanding to 20% as they scale, HIMS at 27x EBITDA represents the kind of opportunity that makes me sit up straighter in my ergonomic chair. That multiple would make perfect sense for a company growing at half this rate.

What's more telling than spreadsheets, though, is customer loyalty. During my years managing portfolios worth more than some small nations' GDPs, I developed a simple litmus test: if a company disappeared tomorrow, would its customers feel inconvenienced or devastated?

Hims has clearly crossed into "devastated" territory for its growing user base - the kind of emotional moat that Warren Buffett probably dreams about between bites of his McDonald's breakfast.

For those hunting increasingly endangered species - growth with reasonable valuation, momentum with sustainable model, actual substance beneath the hype - HIMS offers a compelling specimen. These GLP-1 deals aren't the main story; they're just the latest chapter in a much longer narrative about healthcare's digital transformation.

And if there’s one thing I’ve learned from diving shipwrecks in Truk Lagoon to decoding market trends from Tokyo to New York — it’s that the journey tells you more than any single milestone ever could.

This one looks increasingly profitable for those with the patience to stay the course.

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-05-01 12:00:162025-05-01 12:35:28Telehealth's New Weight Class
april@madhedgefundtrader.com

April 15, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 15, 2025
Fiat Lux

 

Featured Trade:

(THE WEIGHT OF EXPECTATIONS)

(LLY), (NVO)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-04-15 12:02:312025-04-15 12:12:40April 15, 2025
april@madhedgefundtrader.com

The Weight Of Expectations

Biotech Letter

You know that feeling when you've found the perfect restaurant? The food is exquisite, the atmosphere divine, and then you get the bill—and suddenly you're calculating if selling a kidney is a viable financial strategy.

That's essentially my relationship with Eli Lilly (LLY) right now. Phenomenal company, stellar performance, price tag that makes my wallet weep.

I've had a complicated romance with this pharmaceutical juggernaut. Back in my hedge fund days, I learned that timing is everything with pharma stocks. It's like catching the perfect wave off Malibu – ride it too early, you're just splashing in the shallows; too late, and you're eating sand.

When I first spotted Lilly in June 2023, it was set up beautifully. Shares rocketed 56.2% before I downgraded to a 'hold' last February, while the broader market trudged along with a mere 12.3% gain.

Since then, the stock has performed almost exactly as predicted—just a 0.2% gain compared to the S&P 500's 1.33%. More recently, it's dropped 6.9% since January, looking positively rosy next to the broader market's 12.2% decline.

The company's fourth-quarter results read like a biotech investor's fantasy novel. Revenue soared 44.7% year-over-year to $13.53 billion, driven by its dynamic weight-loss duo.

Mounjaro's sales jumped 60.1% to $3.53 billion, while Zepbound exploded from $175.8 million to a jaw-dropping $1.91 billion.

I've watched patients in clinical trials shed substantial weight on these medications—one of my research contacts dropped 43.4 pounds since starting treatment—and I can tell you these drugs are creating waves not just in waistlines but across the entire healthcare sector.

Other stars in Lilly's portfolio include Verzenio for breast cancer (up to $1.56 billion from $1.15 billion), Jardiance for diabetes (climbing to $1.20 billion), and solid gains from Taltz and Humalog.

Only Trulicity disappointed, watching its revenue tumble from $1.67 billion to $1.25 billion—predictably cannibalized by Lilly's newer weight-loss offerings. It's like watching your reliable sedan gathering dust after buying a Tesla.

With this revenue bonanza, profits naturally skyrocketed. Net income more than doubled to $4.41 billion, adjusted profits surged to $4.81 billion, and operating cash flow swung from negative $311.9 million to positive $2.47 billion.

In my decades of following pharmaceutical stocks from Tokyo to Wall Street, I've rarely seen a quarterly performance this impressive. If Lilly were a student, it would be the annoying one breaking the curve for everyone else.

Looking ahead, management projects 2025 revenue between $58-61 billion (a 32.1% increase at midpoint) and adjusted EPS between $22.50-24.

For the upcoming Q1 report on May 1st, analysts anticipate revenue of $12.77 billion (45.6% higher year-over-year) and EPS of $4.70 (nearly double last year's $2.48).

So with all this financial wizardry, why maintain a 'hold'? One word: valuation.

Even using 2025's projected figures, Lilly trades at eye-watering multiples: forward P/E of 33.3, price-to-cash-flow of 27.6, and EV/EBITDA of 21.2.

For context, pharmaceutical peers trade significantly lower. Novo Nordisk (NVO), perhaps the most comparable given its similar weight-loss market success, trades at a P/E of 19.0, price-to-cash-flow of 15.9, and EV/EBITDA of 14.6.

It's like comparing Manhattan real estate to Cleveland—both might be perfectly fine places to live, but one demands a significant premium.

Don't mistake my caution for bearishness. Lilly's product pipeline is robust, highlighted by Retatrutide, which has shown even more impressive weight-loss results—patients lost an average of 24.2% of their body weight (58 pounds) in clinical trials.

The company is also expanding its manufacturing footprint with four new US sites, creating 3,000 permanent jobs. It's acquiring promising treatments like Scorpion Therapeutics' STX-478 for $2.5 billion upfront.

Meanwhile, shareholders enjoyed $4.7 billion in dividends and $2.5 billion in buybacks last year, with a new $15 billion repurchase program and a 15% dividend increase announced for 2025.

I'd compare Lilly's stock to its own weight-loss drugs: remarkably effective, potentially life-changing, but priced at a level that makes you question whether the benefits justify the cost.

If May's results blast past expectations with raised guidance, I'll happily reconsider. Until then, I'm maintaining my 'hold'—admiring from across the room, but not ready to propose just yet.

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-04-15 12:00:042025-04-15 12:07:38The Weight Of Expectations
april@madhedgefundtrader.com

April 10, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 10, 2025
Fiat Lux

 

Featured Trade:

(THE $5 BILLION SECRET I SPOTTED IN MY DOCTOR'S WAITING ROOM)

(AMGN), (NVO), (LLY), (MRK), (REGN)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-04-10 12:02:102025-04-10 13:46:49April 10, 2025
april@madhedgefundtrader.com

The $5 Billion Secret I Spotted In My Doctor's Waiting Room

Biotech Letter

Last Tuesday, my orthopedist kept me waiting 40 minutes past my appointment time – just long enough for me to witness what Wall Street's finest analysts have somehow managed to miss.

As I sat thumbing through a dog-eared copy of Golf Digest from 2018, I counted eight different patients called in for Prolia injections.

By the sixth one, I'd put down the magazine and started taking notes on my phone. By the eighth, I was already mentally calculating position sizes for my portfolio.

"You know what you just saw?" my doctor asked when he finally saw me. "That's Amgen's cash cow – $5.4 billion in sales last year for a twice-yearly injection. And guess what? Half these patients will be on it for life."

When I pressed him on competing drugs, he just laughed. "Their sales reps bring the best lunches. But seriously, it works, patients tolerate it, and insurance covers it. In medicine, that's the holy trinity."

While half of Wall Street hyperventilates about which pharmaceutical giant will dominate the weight loss market, and the other half chases whatever shiny tech story came out this morning, they're all missing Amgen (AMGN) – a money-printing machine trading at just 14.9 times earnings with a 3.1% dividend that grows like clockwork.

I've been investing in pharmaceutical companies since I covered Merck's (MRK) explosive growth for The Economist in the late 1970s, and one lesson has remained constant: the market consistently underestimates companies with proven track records during transitions.

Amgen, trading at $307, is a textbook example of this phenomenon right now.

The headline numbers don't initially spark excitement – management is guiding for modest 5% revenue growth and 4% EPS growth this year. But having analyzed hundreds of pharma companies over five decades, I know these conservative guidance figures are often the prelude to significant outperformance.

What matters more is their $5.9 billion R&D investment last year (up 25% from 2023) and the underappreciated potential of their pipeline.

Look beyond the surface, and you'll find Amgen has quietly built something remarkable. While everyone's fixated on Novo Nordisk’s (NVO) Ozempic and Wegovy, few have noticed that Amgen's existing product portfolio is delivering solid results.

Inflammation drug TEZSPIRE grew 71% year-over-year and is approaching the $1 billion annual sales milestone. Oncology drug BLINCYTO jumped 41%, and their cholesterol drug Repatha, combined with bone health treatment EVENITY, delivered $1 billion in year-over-year growth.

The real hidden value lies in Amgen's obesity program. The anti-obesity market that barely existed a few years ago has exploded to $2.2 billion and is projected to grow at 30% annually through 2030.

Eli Lilly (LLY) and Novo Nordisk have seen their market caps soar into the stratosphere on the strength of their GLP-1 drugs, but Amgen's market valuation doesn't reflect any meaningful potential from MariTide, their Phase 3 obesity candidate.

This reminds me of 2012 when I began accumulating Regeneron (REGN) while the market was completely missing the potential of Eylea. That position delivered a 580% return over the following three years.

What's particularly attractive about Amgen is the margin of safety it offers. With a 3.1% dividend yield (backed by a manageable 45% payout ratio and 13 consecutive years of growth), a forward P/E of just 14.9, and a fortress-like 46.3% operating margin, you're being paid to wait for the pipeline to deliver.

The company has been aggressively paying down the debt from its Horizon Therapeutics acquisition, reducing long-term obligations by $6.6 billion last year alone.

Their financial discipline stands in stark contrast to many of the speculative biotech plays I've been pitched recently. At a dinner with venture capitalists in Boston last week, I listened to presentation after presentation about pre-clinical assets with billion-dollar valuations and no revenue in sight.

Meanwhile, Amgen generated $33.4 billion in sales last year with industry-leading EBITDA margins of 45%.

Of course, there are risks. The upcoming patent expiration of osteoporosis drug Prolia this year creates a revenue gap that needs filling.

The Trump administration's Department of Government Efficiency (DOGE) initiative could potentially impact FDA testing labs, slowing approval timelines. But these concerns are already priced into the stock, while the potential upside from MariTide and other late-stage candidates is not.

Having navigated multiple market cycles since the 1970s, I've learned that the best investments often come when solid companies are temporarily overlooked during market rotations. Amgen remains a proven pharmaceutical innovator with strong cash flows, growing dividends, and a promising pipeline that offers compelling value.

I started building a substantial position in Amgen at around $260 during the post-election pharmaceutical sell-off and have continued to accumulate shares on weakness.

With a reasonable valuation, strong pipeline optionality, and dividend income that beats 10-year Treasury yields, Amgen represents the kind of steady compounder that has consistently outperformed over full market cycles.

In my decades of investing, I've found that buying excellent businesses during periods of unwarranted pessimism is the closest thing to a guaranteed winning formula.

With Amgen, you're essentially being paid a 3.1% annual dividend to own a company that could deliver a major surprise in the obesity market – the same market that transformed Novo Nordisk and Eli Lilly into two of the world's most valuable companies.

Sometimes the smartest investments are like colonoscopies – nobody's excited to talk about them at parties, but they'll save your financial health in the long run.

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-04-10 12:00:482025-04-10 12:36:25The $5 Billion Secret I Spotted In My Doctor's Waiting Room
april@madhedgefundtrader.com

April 1, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
April 1, 2025
Fiat Lux

 

Featured Trade:

(HOW ONE SMUG DANE MADE ME EAT MY WORDS)

(NVO), (LLY), (ULIHF), (LXRX)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-04-01 12:02:282025-04-01 12:21:28April 1, 2025
april@madhedgefundtrader.com

How One Smug Dane Made Me Eat My Words

Biotech Letter

Back in 2008, I found myself in a private dining room at Copenhagen's Noma restaurant – then barely known outside culinary circles – seated next to a senior Novo Nordisk (NVO) executive who couldn't stop talking about their early-stage GLP-1 research.

"This will change diabetes treatment forever," he insisted between bites of moss and lichen. I nodded politely while thinking he'd had too much aquavit. Fast forward to today, and I've never been happier to have been dead wrong.

That same GLP-1 technology now powers Ozempic and Wegovy, creating a weight-loss revolution that's transformed both waistlines and balance sheets.

But here's what has me reaching for my trading account: Novo Nordisk's stock has somehow crashed 50% since last summer, creating what might be the buying opportunity of the decade in the pharmaceutical space.

Meanwhile, their American rival Eli Lilly (LLY) has remained relatively stable despite identical market challenges. Let's dissect this peculiar divergence.

The facts paint a compelling picture: Novo Nordisk remains the undisputed global leader in the GLP-1 segment with a commanding 55.1% market share.

Their quarterly revenue hit $11.95 billion, up 25.13% year-over-year – not quite matching Lilly's impressive 44.7% growth, but still exceptional by any standard.

What's particularly striking is the valuation disconnect. Novo now trades at just 17.9x forward earnings compared to Lilly's 35.4x multiple. That gives Novo a PEG ratio of 0.97 – catnip for value investors hunting growth at a reasonable price.

The Danish giant's financial position remains rock-solid with lower net debt ($10.6B vs. Lilly's $31B) and a superior debt/EBITDA ratio. Their EBIT margin stands at an impressive 48.2% versus Lilly's 38.9%.

The precipitous stock decline stems from two primary concerns: recent clinical trial results for their next-generation Cagrisema showed 22.7% weight loss versus their 25% target, and potential U.S. tariffs could pressure margins on European-manufactured drugs. Both fears seem drastically overblown.

For context, Novo's monthly RSI has dropped below 40 – a rare technical signal that has occurred only three times this century (2002, 2009, and 2016), with each instance preceding returns exceeding 500% before the next correction.

Historical patterns aren't guaranteed, but they certainly make me sit up straighter in my trading chair.

The company isn't standing still either. They've committed $4.1 billion to expand U.S. manufacturing facilities, reducing tariff exposure.

They've also signed deals worth up to $3 billion with United Laboratories (ULIHF) and Lexicon Pharmaceuticals (LXRX) to bolster their weight-loss drug pipeline, ensuring they remain competitive with Lilly's offerings.

Last month at a healthcare conference in Boston, I cornered a veteran endocrinologist who's been prescribing these medications since their approval.

"The competition between Lilly and Novo is creating better outcomes for patients," she told me. "But from a prescription perspective, we still reach for Novo's products first in most cases."

That kind of clinical preference creates a moat that's difficult to quantify on balance sheets but enormously valuable over the long term.

While Eli Lilly deserves its premium valuation with a more diversified therapeutic portfolio spanning oncology, immunology, and neurology, Novo's singular focus on diabetes and obesity has created unparalleled expertise in categories representing massive long-term growth markets.

The obesity treatment market alone is projected to grow at 22% annually, with GLP-1 drugs leading the charge. Approximately 25% of the world's population will be obese by 2035, and Western markets like the U.S. and Europe (Novo's primary territories) will see the highest rates.

Both companies will thrive in this expanding market, but at current prices, Novo represents a superior investment opportunity. Analyst consensus targets suggest 57% upside potential for Novo versus 23% for Lilly.

I've initiated a position in Novo Nordisk at these levels while maintaining a smaller holding in Lilly for diversification. After all, in pharma investing, sometimes the most profitable opportunities emerge when the market overreacts to short-term concerns.

As for that Danish executive from 2008? He retired to a villa overlooking the Øresund Strait last year. I sent him a congratulatory gift basket filled with moss and lichen – a reminder of where billion-dollar ideas sometimes begin.

 

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-04-01 12:00:232025-04-01 11:38:50How One Smug Dane Made Me Eat My Words
april@madhedgefundtrader.com

March 13, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 13, 2025
Fiat Lux

 

Featured Trade:

(THE 10,000 DAILY CONSULTATIONS YOU'LL NEVER SEE)

(HIMS), (TDOC), (GDRX), (NVO), (LLY)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-03-13 12:02:022025-03-13 12:52:51March 13, 2025
april@madhedgefundtrader.com

The 10,000 Daily Consultations You'll Never See

Biotech Letter

Did you know that 100 years ago, the average American lifespan was just 54 years? Today, we're approaching 80.

But what's truly remarkable isn't just that we're living longer—it's that a 36-year-old former Tinder executive named Andrew Dudum is revolutionizing how we access healthcare.

His company, Hims & Hers (HIMS), has exploded from a niche men's health startup into a $1.5 billion healthcare powerhouse in just a few years.

What exactly does HIMS do?

HIMS is transforming healthcare with a tech-first approach. They began by solving embarrassing men's health problems like ED and hair loss through an online platform, but have since built a vertically integrated healthcare powerhouse.

Now they handle everything from virtual doctor's visits and AI-powered diagnostics to personalized medication compounding and doorstep delivery.

All without the patient ever leaving their couch or explaining their problems to three different receptionists. It's healthcare reimagined for the digital age—and patients are flocking to it.

The numbers don't lie. By the end of 2024, they hit 10,000 patient visits per day - that's more than some mid-sized hospitals.

Their subscriber base swelled to 2.2 million, up 45% year-over-year. Even more impressive is that 55% of those subscribers are using at least one personalized solution, not just generic treatments.

What makes HIMS so disruptive is their mastery of the tech playbook that Wall Street has been drooling over for years. They're capturing data at every patient touchpoint and have built one of healthcare's largest proprietary datasets.

My sources tell me they've got over 500,000 square feet of compounding pharmacies and fulfillment centers spread across Ohio, Arizona, and California. These aren't your father's drugstores.

Unlike Teladoc (TDOC) and GoodRx (GDRX), who dabble in AI for basic tasks, HIMS goes much deeper.

They're personalizing treatments, fine-tuning dosages, improving adherence, and creating custom supplement plans. Their AI chatbots handle everything from prescription refills to progress tracking.

I met a guy last week who manages a tech fund in Boston who put it best: "Each new subscriber makes their entire system smarter." That's a competitive moat that gets wider by the day.

Revenue has followed this growth trajectory like a heat-seeking missile. In 2024, the company raked in $1.5 billion, a staggering 69% increase year-over-year. Their Q4 revenue hit $481 million, nearly doubling with a 95% year-over-year increase.

But here's where it gets even more interesting. Their weight loss treatments have been absolute rocket fuel for growth.

Their oral-based offering reached a $100 million revenue run rate within just seven months of launch. And their GLP-1 offering (launched in Q2-24) generated more than $225 million in incremental revenue during 2024 alone.

My friend Janet at the Fed would be impressed by their margins, too.

Adjusted EBITDA margins reached 12% in 2024, with adjusted EBITDA increasing by 160% year-over-year to $54 million in Q4.

They hit their first full year of GAAP profitability with net income of $126 million and strong cash flow of approximately $200 million. That's what I call a healthy business.

But here's the rub. HIMS is betting big—perhaps too big—on weight loss treatments.

They generated $225 million from GLP-1 offerings in 2024 and project $725 million in 2025. That's a massive chunk of revenue hanging on one specialty.

The FDA isn't thrilled about compounded semaglutide, which HIMS relies on. If regulators clamp down, they're in trouble.

Worse, supply is controlled by Novo Nordisk (NVO) and Eli Lilly (LLY), creating a precarious position for HIMS. If insurance coverage expands for branded GLP-1s, patients might flee HIMS' alternatives.

They're trying to pivot to oral therapies and AI coaching, but it's a high-stakes gamble. As my hedge fund buddies would say, that's a lot of eggs in one regulatory basket.

So, what about valuation? There's no getting around it—HIMS is trading at premium multiples: 3.76x forward EV/Sales versus the sector median of 3.19x, an EV/EBITDA of 29.69x compared to 12.12x, and a sky-high forward P/E of 65.96x against the sector's more modest 25.46x.

When you stack it up against competitors, the gap grows even wider. HIMS' forward P/E makes GoodRx (29.65x) seem downright affordable, and its EV/Sales ratio towers over both Teladoc (0.74x) and GoodRx (2.42x).

Is that premium justified? With revenue growth cruising at 69%, there's a case to be made—but investors should be cautious. I've watched this story unfold countless times: today's darling of Wall Street can easily turn into tomorrow's cautionary tale.

Still, for those with a strong stomach and the patience to see this through, HIMS is definitely worth a closer look. After all, we're witnessing one of the most significant transformations in healthcare in over a century.

Just think about it – In 1924, Americans relied on house calls and patent medicines. Today, personalized treatments arrive at our doorsteps after a five-minute video chat.

And the company leading this healthcare revolution? Founded by a guy who used to help people swipe right on Tinder.

From patent tonics to AI-prescribed pharmaceuticals in a century. Seems our approach to awkward health problems has evolved even faster than our lifespans.

Who knew swiping right would someday fix more than just your dating life?

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 april@madhedgefundtrader.com https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png april@madhedgefundtrader.com2025-03-13 12:00:162025-03-13 12:52:37The 10,000 Daily Consultations You'll Never See
april@madhedgefundtrader.com

March 6, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
March 6, 2025
Fiat Lux

 

Featured Trade:

(THE DANISH DILEMMA)

(LLY), (NVO)

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