2 Healthcare Stocks That Have Doubled Over the Last Year but Still Have Room to Run

Hims & Hers Health (HIMS) saw its stock surge over 200% in the past year, driven by strong Q1 revenue growth of 110% and $50 million in free cash flow, despite shifting its weight loss strategy post-FDA resolution on compounded GLP-1s and acquiring European digital health platform Zava for international expansion. Concurrently, Doximity (DOCS) recorded a 100% stock increase, reporting robust FY25 financials with revenue up 20% to $570.4 million, net income up 51% to $223.2 million, and free cash flow up 50% to $266.7 million, leveraging its position as the largest digital platform for U.S. medical professionals to generate significant advertising and recruitment revenue.

Analysis

Hims & Hers Health (HIMS) has delivered exceptional stock performance, rising over 200% in the last twelve months, primarily fueled by investor enthusiasm for its compounded GLP-1 weight loss drug offerings. However, a recent FDA declaration resolving the branded drug shortage has curtailed the company's ability to mass-produce these compounded versions, leading to the termination of a partnership with Novo Nordisk and necessitating a strategic pivot. HIMS is now shifting its focus to oral weight loss medications, liraglutide, and its core subscription-based services in sexual health, dermatology, and mental health. The company's proactive strategy is underscored by its recent acquisition of European digital health platform Zava, which expands its footprint into the U.K., Ireland, France, and Germany, signaling a clear path for international growth. Despite the GLP-1 headwind, the company's fundamentals remain robust, with Q1 revenue growing 110% year-over-year and generating approximately $50 million in free cash flow. Concurrently, Doximity (DOCS) has also seen its stock double, driven by its dominant position as the largest digital network for U.S. medical professionals. Its business model, which offers free tools to clinicians to build a large, targeted audience, has proven highly lucrative. Revenue is generated from pharmaceutical companies and health systems for advertising and recruitment. For its fiscal year 2025, Doximity reported a 20% increase in revenue to $570.4 million, a 51% surge in net income to $223.2 million, and a 50% rise in free cash flow to $266.7 million, highlighting its strong profitability and cash-generating capabilities as a specialized advertising platform.

Key Decisions for Investors

• Investors in Hims & Hers Health should scrutinize the company's ability to sustain its growth trajectory by successfully transitioning its weight-loss segment and realizing synergies from the Zava acquisition for European expansion.
• Given Doximity's high-margin business model and impressive 51% growth in net income, it should be evaluated as a profitable advertising and data company with a strong, defensible moat within the U.S. healthcare sector.
• Considering the significant stock appreciation in both companies, portfolio managers must weigh HIMS's higher-risk, strategic pivot against Doximity's established and highly profitable business model.