$HIMS: Paul Cerro wouldn't trust the CEO to walk his dog. He's still long. Why? | Cedar Grove

Summary

• Paul Cerro is long HIMS for the third leg of a rare triple: long in 2024 into the compounded-GLP-1 boom, short into the FDA ending the compounded-GLP-1 shortage in “the third week of February of 2025” (after the stock rose from $25 to $72 a share), covered at the end of Q1 after it broke $14, and now long again. His edge is experiential — he helped build competitor Ro until January 2022 — “I probably know it better than anybody on Twitter who is not building it themselves.”
• The core of the new thesis: bulls are watching the wrong thing. Peptide launches, testosterone, generic GLP-1s in Canada and the UK are “table stakes… It’s not a miss, it’s a must.” The real play is the data/labs layer, because “the company has not had an issue getting customers. They have had an issue keeping customers” — subscriber counts have “barely grown” over the last three quarters despite a blockbuster year, and improving retention transforms LTV and payback globally.
• On valuation, Cerro says one of two prices has to be wrong — Whoop’s $10B private valuation (“in what world is a watch worth this much?”) or HIMS at roughly $8B EV. He initially read management’s 2030 targets of $6.5B revenue and at least $1.3B EBITDA as “what mythical numbers are these,” but with Zoba and Eucalyptus adding an international business, “that’s probably conservative, actually” — leaving the stock at ~6x 2030 EBITDA versus ~30x 2026.
• The management problem is stated in Cerro’s own report: “Would I trust the CEO to walk my dog or plant-sit my cactus? No.” Hims’ CEO Andrew, who blocked Cerro in 2021 before the stock dropped 90%, got his “reality check” in February 2025 — FDA and FTC actions, an SEC matter that Cerro thinks was still ongoing, and a Novo Nordisk IP suit that Cerro believes was dismissed without prejudice — and Cerro’s own reality check was “I put too much emphasis on morality… I can’t rely on the morality police to actually come in and do their job.”
• Andrew Walker’s sharpest pushback: the 2030 bull case requires double-trusting a CEO the bull doesn’t trust — believing both the ~4x EBITDA growth and a heavily adjusted 2025 number ($317M adjusted EBITDA including ~$130M stock comp and ~$135M D&A that is “kind of a real number,” plus legal-settlement add-backs). Walker also notes his own rule: every time he excused a management lie instead of selling, “I’ve had my face ripped off.”
• Walker sees legalized peptides as a major potential bull case: the illicit market is pegged at just under $2B and, in his view, “once it goes legit then it’s like multiples of that,” with HIMS well-positioned to own the Instagram acquisition channel. Walker argues consumers have proven price can beat safety — “People were buying GLP-1s off of Groupon, dude. Groupon.” — though churn-and-burn startups shipping unverified Chinese-lab product could add short-term volatility before well-capitalized players potentially win.
• Near-term setup for the August 10 print: guidance moves in opposite directions, all else equal. Eucalyptus (closed in June) adds a few hundred million of unprofitable revenue, so revenue guide rises while adjusted EBITDA guide “arguably has to come down”; the swing factors are the first full quarter of the Novo Nordisk partnership and how labs/testosterone/menopause have scaled since their September–October launches. CVS, Walgreens, Walmart? “They don’t matter” — they’re fighting each other in insurance-covered medications while HIMS is pure cash pay.

Deep dive

1. A rare triple call: long, short, and long again — from someone who helped build the competitor

• Cerro’s disclosure doubles as his credential: he worked at Ro until January 2022 and worked directly with its CEO at certain points, framing his HIMS work accordingly — “my knowledge comes from being able to build this business… I’m not just pulling this information out of thin air.”
• Walker’s framing of why the history matters: like a sell-side double upgrade, an analyst who was bullish and right, then bearish and right, then bullish again deserves outsized attention. Cerro went long in 2024 before compounded GLP-1s even launched, covered his short at the end of Q1 this year after the stock broke $14, and separately saw litigation risk subdued after the Novo Nordisk IP suit and subsequent deal. Cerro believes the case was dismissed without prejudice, so “they can bring it back if Hims steps out of line.”

2. The cash-pay premise: a system that “rewards inefficiency”

• The original 2024 thesis was the future of telehealth as insurance disruption: in US healthcare, “everybody’s beaks need to get wet,” so a hospital bill “negotiated” from $40,000 to $30,000 by insurance might be $5,000 or $2,000 if you just negotiate cash. Cerro’s reluctant analogy: “it’s almost like a Walmart everyday low price… this is the price.”
• Walker’s illustrative anecdote from the other side — a rec-league head cut producing a $2,500 ambulance bill, “the most expensive intramural game of all time” — and his skeptical question of why cash pay beats an insurer negotiating for 5 million members goes essentially unrebutted except by the incentive argument.

3. The GLP-1 loophole had an expiration date — and Cerro called it

• The compounding exception depended on an FDA-declared shortage. The red flag came on the Q2 2024 call, when CEO Andrew said he’d keep making the drug even after the shortage ended — “wait a second, back up. That’s not allowed.”
• Cedar Grove’s ground research in January 2025 — pharmacies across roughly 18 states and 32 cities could fill the drug same-day or next-day — meant “that is not grounds for a shortage anymore.” The FDA ended it the third week of February 2025; the stock, having risen from $25 to $72 a share on shortage-timing bets, immediately crashed afterward.
• His 2025 bear case in one line: growth was over-indexed to GLP-1s while the core decelerated, so management “either need to pull some rabbits out of their hat or they have to keep doing this arguably noncompliant prescribing.”

4. The actual thesis now: retention and data, not dispensing

• Cerro’s contrarian emphasis: bulls and analysts fixate on HIMS’s ability to “market and dispense drugs efficiently” — peptide launches, testosterone, generic GLP-1s in Canada and the UK — but “that is the table stakes part of the business… It’s not a miss, it’s a must.”
• The load-bearing observation: “The company has not had an issue getting customers. They have had an issue keeping customers.” Subscribers have “barely grown” in the last three quarters despite a blockbuster year. The value creation is the lab-services/data layer — already live, “not a pipe dream” — because better patient outcomes and feeling “acknowledged as unique individuals” extend retention, raise LTV, shrink the roughly six-month payback period, and scale internationally.
• Walker’s restatement, which Cerro endorses: today’s model doubles your money if a customer acquired in six months lasts a year, but high-churn businesses hit a growth wall; the play is turning one year into a lifetime via longitudinal lab data — labs at 25, 30, 35, then testosterone, then cancer and cholesterol.

5. Walker’s wearables pushback: what’s unique about HIMS’s data?

• The challenge in full: Whoop tracks his heartbeat — “I think they argue it’s 100 times per second” — and has daily interaction; HIMS’s entry point is blood labs, which are “a lot more commoditized.” And even Whoop faces Apple on his other wrist — so isn’t HIMS’s data play at risk from a giant swooping in, with Amazon “clearly dabbling around” in telehealth?
• Cerro’s counter: the medication platform is the natural aggregation point — “if you’re already with a platform that already handles all of your medications, arguably you would probably want to stick with that place,” syncing wearable data via API. Walker’s twist: that could be the bear case on Whoop — HIMS pulls Apple Watch data and cuts out the roughly $250/year subscription.
• Walker’s Fitbit precedent: Fitbit reached roughly a $9–10B public valuation, the Apple Watch ultimately displaced it, and Google bought it for about $2B roughly six years later. Cerro adds that Apple had, he thought, very recently lost a Masimo pulse-oximeter IP suit, showing how companies are expanding in both directions: wearables adding labs (Whoop), lab companies adding supplements and at-home tests (Function Health), and HIMS running the same playbook “just in the reverse.”

6. Valuation: someone is wrong — Whoop at $10B or HIMS at $8B

• Cerro on private marks: “I have never been a fan of private market valuations ever… In what world is a watch worth this much?” One of the two prices must be wrong, and he treats Whoop’s valuation as the likelier error.
• On the 2030 targets ($6.5B revenue, at least $1.3B EBITDA, given in May 2025): his first reaction was “what mythical numbers are these and where is he getting them from?” — but that guide predated Zoba and Eucalyptus. With international layered on, “that’s probably conservative, actually.”
• The math as Walker lays it out: ~$8B EV (converts push it above the headline $7.5B), ~30x the slightly-over-$300M 2026 EBITDA target, ~6x 2030 EBITDA with mid-to-high-teens top-line growth. Cerro’s verdict: “not dumb cheap,” lots of execution risk across EU/Canada/Brazil/Australia regulatory regimes, but “not extreme in the slightest” if the retention thesis holds.

7. Icarus, Napoleon, Teflon Don: trusting the numbers of a CEO you don’t trust

• Cerro’s history of monikers tracks the arc: Icarus in 2024, Napoleon in February 2025, Teflon Don in October 2025 — “I think he actually thinks he’s like some type of god right now because no one’s going after him.” The February reality check — FDA and FTC actions, an SEC matter he thought was still ongoing, and the Novo suit — means “now he knows that you actually can’t step out of line and not face consequences.” Cerro trusts “his business acumen when it is checked,” not the man. (He’s never spoken to him: the CEO blocked him in 2021 over valuation criticism, “and then it dropped 90%. I feel like I earned my stripes.”)
• Walker’s double-trust objection — worth keeping whole: the 2030 case requires believing both a 3–4x EBITDA ramp and a heavily adjusted base ($317M adjusted EBITDA with ~$130M stock comp and ~$135M D&A that is “kind of a real number” given intangible investments, plus legal-settlement add-backs) from management Cerro wouldn’t trust to walk his dog. And his rule of thumb: every time management lied and he rationalized instead of selling, “I’ve had my face ripped off.”
• Walker’s Elon Musk analogy cuts both ways: bears kept predicting Musk’s reality check while his stock went straight up. But Walker distinguishes the compounding risk: miscompounding can make people sick or die, unlike missed autonomous-driving promises. Cerro concedes the CEO “paid no repercussions” (crediting Hunterbrook’s reporting) and offers his own change of mind via David Einhorn’s book about “fooling” some people all the time: the “if my stock price is still high, then it can’t be fraud” excuse “was all of 2025… I can’t put faith in regulators to do the right thing.”

8. Peptides and the Chinese-lab wild west: a bull case with safety risk

• Walker is “actually not” bearish on peptides: he sees a regulated market as a major potential bull case, with HIMS well positioned to use Instagram marketing. Cerro says the illicit market is valued at just under $2B; Walker argues that once it goes legitimate, it could be multiples of that. Walker’s evidence that consumers may prioritize access and price over provenance: “People were buying GLP-1s off of Groupon, dude. Groupon.” — and they weren’t getting the branded drug.
• Cerro described quality-control failures in Chinese-lab orders: purported 10mg retatrutide orders could be 20mg or 5mg, or a different drug entirely; “there’s so many breaks in that system of trust me, bro.” Paul’s broader worry is that AI agents will make commerce frictionless and consumers may “just inject anything into their body” on price alone.
• Cerro’s counter that legality doesn’t equal safety: Done and Cerebral had legal access to controlled substances, told nurse practitioners to do “the bare minimum and push these drugs on people,” and a founder was sentenced to something like six years in prison — “there’s always a risk there, whether it’s legal or not.”

9. Churn-and-burn competitors, the Ro ADHD story, and why CVS/Walgreens “don’t matter”

• Walker’s low-end competition worry: hundreds of fly-by-night Instagram startups willing to “ship them freaking placebo sugar water” could undercut HIMS’s customer acquisition, as illustrated by the one-man MedV fraud making roughly $1B in compounded-GLP-1 revenue. Cerro’s rebuttal comes from his best story: he pitched Ro’s CEO on ADHD medication — “we can make a lot of money with this” — and without skipping a beat was told no, “because it opens up more doors to actually hurt people than help people… as long as we do the right thing for patients, we will win over the long term.” Bad actors may win short-term and add volatility; well-capitalized leaders could cut price, endure the pain, and cross-sell into the data play.
• On CVS, Walgreens, Walmart, Amazon: “I would say they don’t matter” — pharmacies are fighting each other over insurance-covered medications while HIMS is pure cash pay; Walmart’s in-house telehealth offering had to be dialed back because it couldn’t get it to work, while Amazon has more money to try to make its efforts an actual threat. Partnership or referral deals could come later, but “they’re not even thinking about each other at the moment.”
• The earnings-day mechanics (recorded August 6, ahead of the August 10 after-hours report): Eucalyptus closed in June and wasn’t incorporated into the Q1 guide, so 2026 revenue guidance rises by a few hundred million while unprofitable Eucalyptus means EBITDA guidance “arguably has to come down” — plus the first full quarter of the Novo Nordisk partnership and the scaling of labs, testosterone, and menopause since last fall’s launches. On a 100-vol stock, that creates substantial near-term volatility; the thesis, per both, should hold for the next 6–18 months.