Hims & Hers Health, Inc. (NYSE:HIMS) shares fell over 6% in extended trading on August 10 after the telehealth company delivered another quarter of rapid growth alongside sharply weaker profitability. Revenue rose 38% year over year to $753.2 million, subscribers increased 19% to 2.89 million, and Monthly Revenue per Average Subscriber climbed 21% to $92. The company also raised its full-year revenue outlook to $3.1 billion to $3.3 billion from $2.8 billion to $3.0 billion.

The earnings line told a different story. Hims reported an $86.3 million net loss, equal to 37 cents per share, compared with a $42.5 million profit a year earlier. Analysts surveyed by LSEG had expected a loss of just 1 cent per share. Gross margin fell to 64% from 76%.

The market is no longer asking whether Hims & Hers Health, Inc. (NYSE:HIMS) can attract weight-loss customers. The branded GLP-1 pivot has already answered that question. The issue is whether those customers, international expansion, and personalized care can eventually replace the unusually attractive economics of compounded treatments.

BULL CASE

The strongest part of the quarter was that demand survived a major change in the product model.

In March, Hims expanded its branded weight-loss assortment through an agreement with Novo Nordisk and stopped broadly advertising compounded GLP-1 drugs. That could have created a deep revenue gap. Instead, management said the branded shift was a key driver of renewed domestic growth. U.S. revenue increased 16% year over year to $621.8 million.

Hims & Hers Health, Inc. (NYSE:HIMS) ended the quarter with approximately 307,000 more subscribers than it had at the end of March. Those were consolidated net additions and included subscribers acquired with Eucalyptus, which joined Hims during June. Even with the acquisition contribution, the increase shows that the platform continued expanding during the branded-drug transition.

Monthly Revenue per Average Subscriber reached $92. Hims & Hers Health, Inc. (NYSE:HIMS) calculates the metric using total revenue, so it includes one-time purchases as well as revenue from Eucalyptus. Excluding Eucalyptus, the figure would have been $90, while excluding one-time purchases would have reduced the reported amount by approximately another $10.

That composition makes the metric broader than recurring subscription revenue, but it also shows how Hims & Hers Health, Inc. (NYSE:HIMS) is monetizing customers through a wider mix of products and transactions. Branded weight-loss drugs generate more revenue per user, although much of that benefit is offset by higher product costs. Management said retention among newer branded weight-loss cohorts was tracking in line with expectations, while early users receiving a more immersive app experience showed lower cancellation rates.

The revenue guidance was not solely an acquisition story. Eucalyptus contributed approximately $40 million in the second quarter after joining Hims & Hers Health, Inc. (NYSE:HIMS) in June. Existing international operations still grew 13% sequentially without that contribution. Chief Financial Officer Yemi Okupe also said the domestic and existing international businesses were already running ahead of the company’s previous outlook after removing Eucalyptus from the forecast.

That distinction supports the idea that Hims is becoming broader than a compounded GLP-1 distributor. International revenue reached $131.4 million, while management expects its low-testosterone specialty to soon reach a $100 million annual revenue run rate. The company also expects its Hers business to generate more than $1 billion of revenue this year. These businesses give Hims & Hers Health, Inc. (NYSE:HIMS) more ways to grow even if U.S. weight-loss economics remain less attractive than they were during the compounding boom.

The longer-term case also depends on what Hims can do after acquiring a customer. Management views weight loss as an entry point into lab testing, hormonal health, cardiovascular care, sleep, and other specialties. If that cross-selling works, the initial margin on a branded GLP-1 prescription may understate the lifetime value of the relationship.

There were early signs of operating leverage below the gross-profit line. On management’s adjusted presentation, marketing expense declined to 34% of revenue, improving by five percentage points from a year earlier. Operations and support also gained three percentage points of leverage from the first quarter as pharmacy throughput increased and customer-support automation began lowering the cost to serve.

Gross profit still rose 16% to $480.8 million despite the lower margin. Adjusted EBITDA reached $60.3 million, ahead of the company’s second-quarter guidance of $35 million to $55 million. Hims & Hers Health, Inc. (NYSE:HIMS) expects adjusted EBITDA of $75 million to $95 million in the third quarter and a return to positive free cash flow during the second half.

The bullish interpretation is that Hims deliberately accepted lower product margins to preserve its position in a fast-growing category, acquire more customers, and create opportunities to sell them additional care. That model does not need the old gross margin to work, but it does need scale and cross-selling to offset the loss of compounded-drug economics.

BEAR CASE

The skeptical case begins with the difference between more revenue and better earnings.

Hims & Hers Health, Inc. (NYSE:HIMS) lifted the midpoint of its full-year revenue outlook by $300 million. At the same time, it narrowed adjusted EBITDA guidance to $275 million to $325 million from $275 million to $350 million. The midpoint of the earnings range fell by $12.5 million even as the sales outlook increased. The implied adjusted EBITDA margin at the new midpoints is approximately 9%, down from about 11% under the previous outlook.

That is the clearest sign that the new revenue is not economically equivalent to the old mix. Cost of revenue more than doubled to $272.4 million in the second quarter, far outpacing the 38% increase in sales. Product and packaging costs increased 141%, while shipping costs rose 56%. The company recorded no weight-loss restructuring charges in second-quarter cost of revenue, meaning the 64% gross margin captured the economics of the current product mix more clearly than the first-quarter result.

The pressure carried through to adjusted results. Adjusted EBITDA declined 27% from $82.2 million a year earlier, and the margin fell to 8% from 15%. Hims & Hers Health, Inc. (NYSE:HIMS) also posted an adjusted net loss of $20.8 million, compared with adjusted net income of $48.7 million in the prior-year quarter.

The headline 37-cent loss included several costs that do not recur at the same level each quarter. Hims recorded $47.5 million of legal contingencies, $28.8 million of acquisition and transaction-related costs, and $4.6 million of restructuring charges. These items accounted for much of the gap between the reported result and expectations, but the adjusted figures still showed substantial margin contraction.

Cash flow revealed another cost of the transition. Operating cash flow was negative $35.9 million and free cash flow was negative $68.2 million during the quarter. Management attributed the pause partly to the working-capital requirements of branded weight-loss drugs.

After quarter-end, Hims & Hers Health, Inc. (NYSE:HIMS) arranged an uncommitted receivables purchase facility with capacity of up to $400 million. The purchaser is not obligated to acquire the full amount, making the facility a source of optional funding rather than $400 million of committed liquidity. Hims expects free cash flow to turn positive again in the second half, making that recovery an important test of whether the working-capital burden is temporary.

International expansion creates a similar tradeoff. Eucalyptus added growth but was operating around break-even to moderate losses, according to management. Hims & Hers Health, Inc. (NYSE:HIMS) plans to invest aggressively across Australia, Canada, Germany, Japan, and the United Kingdom before those markets become meaningful profit centers. That may build a larger platform, but it also means acquired revenue will not immediately repair the margin lost in U.S. weight loss.

Regulation remains part of the business model rather than a risk sitting outside it. The March agreement gave Hims access to branded Ozempic and Wegovy while sharply limiting how it could market compounded GLP-1 products.

The company is also developing peptide-related treatments. Six peptides remain subject to FDA and Pharmacy Compounding Advisory Committee review, and management plans to wait for final rulemaking before launching products that depend on the outcome of that process. Hims & Hers Health, Inc. (NYSE:HIMS) separately discussed introducing already-permitted or Category 1 peptide-related offerings before those reviews conclude. Those products may broaden the platform sooner, but the six treatments under review cannot yet be treated as dependable sources of revenue or margin.

The timeline for normalized earnings is still long. In May, management said Hims & Hers Health, Inc. (NYSE:HIMS) expected to be positioned to return to net income profitability in 2027. On the latest call, it declined to provide a 2027 margin trajectory while maintaining its 2030 goals of at least $6.5 billion in revenue and $1.3 billion in adjusted EBITDA. Investors are being asked to accept a multiyear bridge between today’s 64% gross margin and the 20% adjusted EBITDA margin implied by that longer-term target.

INSIDER MONKEY’S HEDGE FUND DATA ANALYSIS

Insider Monkey’s database shows that 43 hedge funds held Hims & Hers Health, Inc. (NYSE:HIMS) at the end of the first quarter of 2026, up from 39 funds three months earlier.

The filings capture positions held as of  March 31 only and do not capture the recent results.

CONCLUSION

Hims & Hers Health, Inc. (NYSE:HIMS) has shown that consolidated growth can survive the first stage of the GLP-1 reset. Its subscriber base expanded during the quarter, including customers acquired with Eucalyptus, while the domestic and existing international businesses performed better than the company’s previous outlook.

What has not survived the transition is the old margin structure. A 12-percentage-point decline in gross margin, lower adjusted EBITDA despite higher revenue, and negative quarterly free cash flow show that branded drugs and international expansion are changing the economics of the company.

The next test is whether gross margin can stabilize near current levels while marketing efficiency, customer retention, support costs, and cross-selling improve. If adjusted EBITDA dollars and free cash flow begin rising alongside revenue, Hims & Hers Health, Inc. (NYSE:HIMS) can make the case that the reset traded near-term margin for a larger and more durable platform. If sales continue growing while earnings guidance remains flat or falls, the market will increasingly treat the branded pivot as a structural downgrade rather than a temporary investment phase.

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