Hims & Hers Health (HIMS) shares experienced a sharp decline on Tuesday, falling 14.6% to $24.89 after the company reported a first-quarter net loss that reversed a year-ago profit. The selloff reflects investor concerns over the company's strategic pivot away from high-margin compounded GLP-1 drugs toward branded alternatives like Wegovy and Ozempic.
For the first quarter, Hims & Hers posted a net loss of $92.1 million, compared to a net profit of $49.5 million in the same period last year. Revenue rose 4% to $608.1 million, but gross margin contracted significantly to 65% from 73% in the prior year. The margin compression was driven by the shift in product mix and restructuring costs associated with the company's weight-loss drug realignment.
Strategic Reset and Financial Impact
The company recorded $33.5 million in restructuring and related charges tied to its U.S. weight-loss business realignment, of which $28.5 million was allocated to cost of revenue. Additionally, Hims & Hers incurred $15 million in legal settlement expenses and $13.4 million in acquisition and transaction costs. Adjusted EBITDA was cut in half to $44.3 million from $91.1 million a year earlier.
Despite the earnings miss, subscriber growth remained robust. The company reported 2.584 million subscribers, up 9% year-over-year. However, monthly revenue per average subscriber slipped to $80 from $85, reflecting the lower-margin product mix and changes in shipping schedules that affected revenue recognition for certain weight-loss products.
Management Commentary and Outlook
CEO Andrew Dudum characterized the quarter as a calculated reset rather than a sign of weakening demand. He noted that the company shipped over 125,000 Wegovy orders within six weeks of launching direct access to Novo Nordisk's GLP-1 drugs. CFO Yemi Okupe flagged ongoing pressure on gross margins as the company expands into weight loss, diagnostic labs, and international markets, describing the shift as a deliberate strategic pivot.
Hims & Hers raised its 2026 revenue guidance to a range of $2.8 billion to $3.0 billion, and provided second-quarter guidance of $680 million to $700 million, above the Wall Street consensus of $642.95 million. Full-year adjusted EBITDA is expected to be between $275 million and $350 million, implying a margin of 10% to 12%, with a meaningful step-up anticipated in the second half of the year.
Market and Competitive Context
The shift comes amid heightened competition in the GLP-1 market. Novo Nordisk and Eli Lilly are central to Hims & Hers' weight-loss strategy, as the company now offers branded drugs including Wegovy, Ozempic, Zepbound, and others. Amazon has also entered the space, rolling out GLP-1 treatment and virtual care through One Medical, with same-day delivery available in nearly 3,000 cities.
Regulatory developments have further pressured the compounded drug model. On April 30, the FDA signaled plans to remove semaglutide, tirzepatide, and liraglutide from the 503B bulks list, which would tighten rules for outsourcing facilities and make it more difficult to compound these drugs in bulk. This development favors branded drug manufacturers and undermines the workaround that allowed telehealth firms to offer cheap GLP-1s.
Analyst sentiment is mixed but hinges on execution. Jefferies analyst Brian Tanquilut described Hims as an execution story, with investors waiting for clear signs that earnings have bottomed. J.P. Morgan analyst Cory Carpenter pointed to a supportive backdrop including a stable weight-loss segment, legalization of peptides, and potential revenue acceleration later in the year.
The market's reaction underscores a fundamental reassessment of Hims & Hers' business model. While the company retains a large user base and strong brand presence, the move toward branded GLP-1s introduces dependency on pharmaceutical partners, regulatory approvals, and pharmacy supply chains, which may limit margin expansion. Investors will closely watch second-quarter results for evidence that the Wegovy ramp and broader product lineup can deliver sustainable profitability.
