The telehealth platform Hims & Hers delivered a jarring third-quarter earnings report that left investors reeling. While the company posted a impressive 49 percent surge in revenue, its bottom line suffered a dramatic collapse, with earnings per share plummeting by 81.3 percent. This stark contrast raises critical questions about the company’s current trajectory and its future prospects, especially as its stock price has retreated significantly from its 52-week high.
Strategic Shifts and Rising Costs Squeeze Margins
Superficially, the quarterly results appear robust. Revenue reached $598.98 million, comfortably surpassing analyst expectations of $580.2 million. The core online business expanded by 50 percent, and the platform demonstrated an enhanced ability to monetize its user base, with average revenue per user climbing 19 percent to $80 per month.
However, this top-line success came at a considerable cost to profitability. The company’s gross margin contracted by over five percentage points to 73.8 percent. This compression is attributed to escalating operational expenditures and a strategic pivot toward personalized treatment offerings—a move that is currently weighing on earnings.
Regulatory Clouds Hover Over GLP-1 Initiative
A significant area of focus—and uncertainty—is the company’s strategy in the weight-loss medication sector. Following the conclusion of its partnership with Novo Nordisk in June 2025, Hims & Hers has begun offering personalized Semaglutid treatments through compounding pharmacies. This business model operates in a legally ambiguous space.
Should investors sell immediately? Or is it worth buying Hims & Hers?
Despite the regulatory overhang, management has expressed strong optimism, projecting that this segment alone could generate $725 million in revenue by 2026. Concurrently, the company is engaged in active discussions with Novo Nordisk about potentially reintroducing Wegovy to its platform. The feasibility of these ambitious plans remains a key concern for market watchers, as regulatory scrutiny on compounded medications intensifies.
Can International Growth Pave the Way to $6.5 Billion?
Looking for new growth levers, Hims & Hers is turning to international markets. The recent acquisition of the UK-based health platform Zava is a clear step toward exporting its successful US business model to Europe. The platform’s overall user growth remains strong, increasing 21 percent year-over-year to 2.47 million subscribers in Q3, underscoring the persistent demand for digital health services.
Nevertheless, the path to the company’s long-term revenue target of $6.5 billion by 2030 appears challenging. The competitive landscape is becoming more crowded with established players, and ongoing regulatory uncertainties continue to cast a shadow. Given these headwinds, it is no surprise that many financial analysts maintain a cautious stance on the stock’s near-term outlook.
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