Shares of Hims & Hers Health fell more than 7% in premarket trading Tuesday after the telehealth company reported a wider-than-expected second-quarter loss. The company posted a net loss of 37 cents per share, compared with analyst expectations of a 1-cent loss, according to LSEG data.
The weaker bottom line reflects the company's aggressive investments in branded GLP-1 weight-loss treatments and its push into international markets. Hims & Hers incurred $4.6 million in restructuring costs during the quarter related to the transition to branded GLP-1 drugs.
Despite the earnings miss, the company raised its full-year revenue forecast to between $3.1 billion and $3.3 billion, up from its prior range of $2.8 billion to $3 billion. The updated guidance includes revenue from Eucalyptus, the Australian digital health company acquired in June, though most analyst estimates do not yet incorporate that acquisition.
Chief Financial Officer Yemi Okupe told Reuters that the company's underlying operations were performing ahead of expectations even without Eucalyptus. "Even if you pull out Eucalyptus (from the guidance), the domestic business and the existing international business were already ahead of our guidance range," Okupe said.
The company cautioned that gross margins are likely to remain below historical levels as it accelerates investment in weight-loss treatments and international expansion. "Do we have the ability to set the foundation for strong cash flows in the future?" Okupe asked. "Resoundingly, the answer is 'yes.'"
Investments in GLP-1 drugs are driving subscriber growth. Subscribers increased 19% year-over-year to nearly 2.9 million, while monthly revenue per subscriber climbed 21%, highlighting the growing contribution from the weight-loss business.
Analysts noted that near-term margin pressure reflects the cost of building a larger business. "Hims is investing in the business, which may put some pressure on near-term margins, though top-line growth continues," BTIG analysts said in a note.
International expansion could also weigh on profitability, as some overseas markets generate lower margins than U.S. operations. "It's not that it's a bad business. It's just not as lucrative," said Paul Cerro, chief investment officer at Cedar Grove Capital Management, which owns Hims shares.
Hims remains confident in its long-term growth ambitions, reiterating its target of $6.5 billion in revenue by 2030. The company expects to return to profitability in 2027.
Wall Street remains cautious. The average price target from 13 analysts has risen to $30.31 from $29.77, with estimates ranging from $21 to $40. Based on the August 10 closing price, the revised average implies about 5% potential downside. The consensus rating is "Hold" among 18 analysts, with four Buy ratings, 12 Holds, and two Sells.
The latest results highlight a familiar trade-off: rapid expansion and stronger subscriber growth today in exchange for weaker margins and delayed profitability. Investors will weigh whether the growing GLP-1 business and international footprint can justify near-term earnings pressure and support longer-term revenue ambitions.
This article is for informational purposes only and does not constitute financial advice.
