Hims & Hers’ Revenue Beat Came With a Profitability Problem

Key Points

• Hims & Hers reported strong Q2 revenue growth, added subscribers and raised its full-year revenue outlook.
• Hims & Hers still posted a wider-than-expected loss as costs, restructuring charges and acquisition-related expenses pressured profitability.
• The Federal Trade Commission lawsuit, margin pressure and elevated short interest continue to weigh on Wall Street’s view of the stock.

After recently receiving the unwelcome news about Hims & Hers Health NYSE: HIMS being sued by the U.S. Federal Trade Commission (FTC), California, and Utah, investors were dealt another blow on Monday, Aug. 10.

The telehealth platform, which provides direct-to-consumer (D2C) personal care products and virtual medical services, reported Q2 results, which included its second consecutive earnings miss and its fourth in the past five quarters.

Hims & Hers Sees Big Revenue Gain, Raises Full-Year Guidance

On a positive note, Hims & Hers saw an acceleration in both revenue and subscriber growth in Q2. Q2 revenue of $753.21 million exceeded analyst expectations of $698.9 million while representing a more than 38% year-over-year (YOY) increase. Management raised full-year 2026 revenue guidance to a range of $3.1 billion to $3.3 billion.

The company gained roughly 300,000 new subscribers, bringing its total to nearly 3 million. Additionally, Hims & Hers’ investment in AI is beginning to bear fruit. The company reported early benefits from its AI-native care platform, including a 3x increase in customer messaging, an approximately 50% reduction in non-clinical support tasks, and lower cancellation rates in pilot cohorts. Management expects AI investments to pay back within 12–18 months and support improved retention and cost efficiency.

The June acquisition of Australia-based Eucalyptus was also a major growth driver, with international revenue increasing more than 17-fold YOY to $131 million. Hims & Hers expects that figure to grow to at least $600 million for the full year, while expanding its U.S. specialties—such as testosterone, sexual health, and dermatology—to overseas markets. The acquisition, valued at up to $1.15 billion, not only targeted expansion into Australia and Japan, but also a deeper presence in the United Kingdom, Germany, Ireland, and Canada.

According to CFO Yemi Okupe’s comments on the earnings call, the company expects its testosterone segment to become its sixth U.S. specialty, reaching a $100 million annual revenue run rate. Hims & Hers also announced that Dr. Anant Vinjamoori joined as chief medical officer of the Hims brand in June to guide clinical strategy, while the company’s network has grown to over 1,600 providers across its global operations.

Earnings Continue to Be a Cause for Concern

Despite strong subscriber growth and 38% YOY revenue growth, the Q2 report had areas of concern: Namely, Q2 earnings per share (EPS) of -37 cents missed the consensus forecast of -5 cents and marked a notable YOY drop from Q2 2025’s EPS of 17 cents.

Notably, profitability and cash flow were under near-term pressure from the business mix and one-time costs, contributing to the stock’s after-hours loss. Adjusted gross margin fell to 64%, down approximately six points quarter over quarter.

While branded GLP-1 weight-loss products and international revenue grew, Q2 free cash flow was -$68 million. The company also incurred approximately $81 million in acquisition, restructuring, and FTC-related legal costs.

Management also said international operations may remain near breakeven as it continues investing for scale. According to CEO Andrew Dudum, the company is “playing offense,” which he expects will pay off in the long term. Dudum added that those moves—including the Eucalyptus acquisition and a strategic partnership with Novo Nordisk NYSE: NVO, maker of semaglutide brands Ozempic and Wegovy—are leveraging Hims & Hers leadership position in digital telehealth platforms to deliver more value to customers at better prices, which is in turn driving customer acquisition.

Short-Term Hurdles Continue to Cloud Wall Street's Outlook

The FTC suit adds another potential source of financial pressure. Hims & Hers reported a Q2 net loss of $86.3 million, narrowing from a $92.1 million loss in Q1, while also recording $47.5 million in legal contingencies during the quarter.

Accordingly, Wall Street is being cautious. HIMS currently carries a consensus Hold rating, with only four of 16 analysts covering the stock assigning it a Buy rating. The average price target of $32.43 suggests limited upside from current levels, and institutional ownership has seen nearly equal inflows ($1.65 billion) and outflows ($1.34 billion) in the past year.

Meanwhile, the stock remains a favorite among the bears. The latest reported short interest now exceeds 30% of the float, or 61.4 million shares valued at $2.29 billion. Perhaps most concerningly, insider trading has seen just one buy in the past year at $1.17 million compared to eight sales totaling more than $50 million.

The market will want the company to improve its profitability after Q2 produced a net loss equal to about 11% of revenue, which could help stabilize some of the stock’s volatility. With a present beta of roughly 2.4, HIMS has historically been considerably more sensitive to broad-market moves than the overall market.

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