Hims & Hers Health, Inc. (NYSE: HIMS) saw its shares recover some ground on Tuesday, closing up 2.16% at $31.75, after a sharp selloff the previous day. The stock, however, remains significantly below its level from last Friday, with investors still digesting news of a payment dispute with Visa and a pending regulatory lawsuit.
The company's market capitalization has shed approximately $473.6 million over the past two trading sessions, based on 233.31 million shares outstanding. Tuesday's close is 6.01% below Friday's closing price of $33.78, following Monday's 7.99% drop. In after-hours trading, shares slipped another 0.22% to $31.68.
Visa Dispute Details
The turmoil began when Bloomberg reported on Friday that Visa had placed Hims & Hers into its Acquirer Monitoring Program. The program tracks dispute rates for card transactions, and Hims exceeded the threshold for disputes in July, according to the report. The company faces a fee of $8 per disputed transaction, resulting in an estimated September fee of nearly $75,000.
Visa's oversight requires that the dispute rate remain below 1.5% over a three-month period for the company to exit the program. While the financial penalty is minimal—amounting to roughly 0.01% of Hims' second-quarter revenue of $753.2 million—the underlying issue could signal deeper problems with customer retention and payment processing.
Hims & Hers stated that only a small number of charges were contested and that it has implemented corrective measures. The company also emphasized that its checkout process clearly discloses membership and medication pricing.
Regulatory and Financial Pressures
The payment dispute comes on top of a lawsuit filed by the Federal Trade Commission (FTC) in July, which alleges issues with billing, cancellation, and privacy practices. Hims has said it will challenge the FTC's allegations.
Financially, the company continues to grow revenue, reporting $753.2 million in Q2 2026, up 38% year-over-year. Subscribers reached 2.891 million, a 19% increase. However, gross margin contracted sharply, falling to 64% from 76% a year earlier, due to a shift in product mix toward branded weight-loss medications and international expansion. The company reported a net loss of $86.3 million, compared to a profit of $42.5 million in the prior-year quarter. Free cash flow was negative $68.2 million.
For the third quarter, Hims projects revenue between $880 million and $900 million, implying sequential growth of about 18% at the midpoint. Adjusted EBITDA is expected to be in the range of $75 million to $95 million.
Analyst Reactions
Wall Street analysts have adjusted their price targets in response to recent developments. Barclays cut its target from $39 to $35 on August 21, maintaining an Equal Weight rating. Truist raised its target from $27 to $32 on August 24, also with a Hold rating. The consensus among 15 analysts is a Hold rating with an average price target of $31.23, ranging from $23 to $42.
Hims & Hers ended Tuesday with a valuation near $7.41 billion, or approximately 2.9 times trailing revenue. The average analyst estimate is just below the current share price.
The market's reaction suggests investors are concerned that the payment dispute may be more than a one-off issue, potentially reflecting vulnerabilities in the subscription model as margins and cash flow face continued pressure.
