Hims & Hers swings to wider loss as branded obesity drugs weigh on margins

Hims & Hers Health (HIMS) posted a wider-than-expected second-quarter loss as its shift toward branded weight-loss drugs drove up costs, rattling investors despite the company lifting its full-year revenue guidance.

The telehealth company reported a net loss of 37 cents per share for the three months ended June 30, well short of analysts' consensus estimate of a 1-cent loss, according to LSEG data. Shares fell 6% in extended trading.

The results reflect the mounting costs of Hims' strategic pivot toward branded GLP-1 obesity treatments and an accelerating international expansion. The company said the transition to branded weight-loss drugs incurred $4.6mn in restructuring charges during the quarter and flagged that gross margins are expected to remain below historical levels for the foreseeable future.

Despite the earnings miss, the company raised its full-year revenue outlook to between $3.1bn and $3.3bn, up from a prior forecast of $2.8bn to $3bn, including a contribution from Eucalyptus, an Australian digital health company Hims agreed to acquire in February. Chief Financial Officer Yemi Okupe said that even stripping out Eucalyptus, the underlying domestic and international businesses had already exceeded the company's original guidance range.

"Do we have the ability to set the foundation for strong cash flows in the future?" Okupe said. "Resoundingly, the answer is 'yes'."

The company's subscriber base grew to nearly 2.9 million in the second quarter, up 19 per cent year on year, while monthly online revenue per average subscriber climbed 21 per cent to $92. Hims said it remains confident in its target of $6.5bn in annual revenue by 2030 and expects to return to profitability in 2027.

Paul Cerro, chief investment officer at Cedar Grove Capital Management, a Hims shareholder, acknowledged the profitability drag from international markets but said the long-term revenue potential remained intact. "It's not that it's a bad business. It's just not as lucrative," he said.

Hims has been pivoting toward personalized treatments amid tightening regulatory scrutiny of compounded drugs. The company is testing ingredients used in compounded peptide treatments and said it is confident it can offer such products at scale if US regulations permit. An FDA advisory panel in July backed reversing Biden-era restrictions on the manufacture of six peptides, though agency staff cautioned that evidence supporting their safety and effectiveness remains limited.

Raul Shah, chief investment officer at DocShah Financial, said he expects Hims to recover to historical profit margins within five years as its international and weight-loss offerings mature.