Hims & Hers Stock Seeks Support as Earnings Casts a Shadow

Shares of Hims & Hers Health Inc. (NYSE: HIMS) are down -6.81% in the last five days, and the markets are holding their breath ahead of the company’s earnings release scheduled for today. The telehealth and wellness company, known for its direct-to-consumer approach, has seen a volatile year, marked by impressive revenue growth offset by concerns about profitability and margin pressures.

Analysts project that Hims & Hers Health (HIMS) will report earnings per share (EPS) of $0.10, down from $0.32 in the same quarter last year, indicating a potential decline in profitability despite strong top-line momentum. Revenue is expected to reach $579.85 million, reflecting an impressive 44.4% year-over-year growth, as the company continues to expand its customer base and product offerings.

Hims & Hers has been on an expansion tear, broadening its service offerings and geographic reach. The company's foray into the Canadian market, following the acquisition of ZAVA, a European digital health platform, signals its ambition to become a global player in the telehealth space. Strategic investments in hormonal health services and lab testing verticals further diversify its revenue streams, moving beyond its initial focus on men's health.

However, the path to sustained profitability remains a key concern. The company's Q2 2025 earnings report revealed a substantial 73% year-over-year revenue increase, reaching $544.8 million, driven by a 75% surge in online revenue to $536.9 million. The subscriber base also grew by 31% to over 2.4 million.

Despite these positive figures, Hims & Hers reported a net loss of $69 million, raising questions about its ability to translate top-line growth into bottom-line profitability. A decline in average revenue per user, from $84 to $74, attributed to the offboarding of GLP-1 subscribers, added to investor worries.

Earlier in the year, the company's Q1 2025 performance painted a more optimistic picture, with revenues exceeding expectations and earnings per share surpassing consensus estimates. This positive news sent the stock soaring by 29% in the subsequent week.

However, the Q4 2024 earnings report revealed a concerning trend: while revenue surged by 95% year-over-year, gross margins contracted significantly due to rising product costs. This margin compression, coupled with increased operating expenses, has fueled doubts about the company's cost management strategies.

While the market seems fixated on Hims & Hers' current lack of profitability, perhaps it's overlooking the long-term potential of a company that is aggressively investing in growth and market share. The short-term pain of margin compression and increased operating expenses could be a necessary price to pay for establishing a dominant position in the rapidly evolving telehealth landscape.

Moreover, the decline in average revenue per user, while concerning, may be a temporary blip caused by the strategic decision to offboard GLP-1 subscribers, potentially paving the way for a more sustainable and profitable subscriber base in the long run.

The market's focus on immediate profits might be blinding it to the significant long-term value that Hims & Hers is building through its strategic expansion and product diversification efforts. The company's management has shown a willingness to make bold moves, such as the ZAVA acquisition, indicating a long-term vision that extends beyond quarterly earnings reports.

The upcoming earnings report will be crucial in shaping market sentiment towards Hims & Hers. Analysts will be closely watching for signs of improving profitability, stabilization of margins, and continued subscriber growth.

Any positive surprises could send the stock soaring, while further disappointments could trigger a sell-off. The company's ability to articulate a clear path to profitability and demonstrate effective cost management will be key in restoring market confidence.

The telehealth sector remains a dynamic and competitive space, and Hims & Hers faces the challenge of balancing growth with financial discipline. Its success will depend on its ability to execute its strategic initiatives, manage costs effectively, and adapt to the evolving needs of its customer base. The next few quarters will be critical in determining whether Hims & Hers can live up to its potential and deliver sustainable value to its shareholders.