10-Q: Hims & Hers Reports Strong Revenue Growth, Profitability Shift

Hims & Hers Health, Inc. reported a 49% increase in Q3 2025 revenue to $599.0 million, driven by personalized offerings, despite a 79% decrease in quarterly net income.

Summary

• Revenue for the three months ended September 30, 2025, increased by 49% to $599.0 million, compared to $401.6 million for the same period in 2024.
• Revenue for the nine months ended September 30, 2025, increased by 74% to $1,729.8 million, compared to $995.4 million for the same period in 2024.
• Net income for the three months ended September 30, 2025, decreased by 79% to $15.8 million, compared to $75.6 million for the same period in 2024.
• Net income for the nine months ended September 30, 2025, increased by 8% to $107.8 million, compared to $100.0 million for the same period in 2024.
• Gross margin was 74% for Q3 2025, down from 79% in Q3 2024, and 75% for the nine months ended September 30, 2025, down from 81% in the prior year.
• Subscribers grew 21% to approximately 2.5 million as of September 30, 2025, compared to 2.0 million as of September 30, 2024.
• Monthly Online Revenue per Average Subscriber increased to $80 for Q3 2025, up from $67 in Q3 2024, and to $80 for the nine months ended September 30, 2025, up from $60 in the prior year.
• Acquired Zava Global GmbH in July 2025 for EUR 219.2 million ($258.0 million) to expand operations in the United Kingdom and launch in the European Union.
• Acquired certain manufacturing assets from CS Bio Co. in February 2025 for up to approximately $39.1 million to strengthen supply chain capabilities.
• Issued $1.0 billion aggregate principal amount of 0% convertible senior notes due 2030 in May 2025, with net proceeds of approximately $968.7 million.
• Entered into a three-year $175.0 million senior secured revolving credit facility in February 2025, with $168.0 million remaining available as of September 30, 2025.
• Net cash provided by operating activities was $238.7 million for the nine months ended September 30, 2025.
• Free Cash Flow was $59.984 million for the nine months ended September 30, 2025.
• The accumulated deficit was $134.4 million as of September 30, 2025.

Sentiment

Score: 6

Explanation: While the company demonstrates strong top-line revenue growth and subscriber acquisition, the significant decline in quarterly net income and gross margin, coupled with substantial increases in operating expenses, indicates a shift in profitability dynamics. Strategic investments and acquisitions are positive for long-term growth, but short-term financial performance shows challenges in cost management and margin preservation. The ongoing legal and regulatory risks add a layer of uncertainty.

Positives

• Strong revenue growth with a 49% increase in Q3 2025 to $599.0 million and a 74% increase for the nine months ended September 30, 2025, to $1,729.8 million.
• Significant subscriber growth, increasing 21% to approximately 2.5 million as of September 30, 2025.
• Monthly Online Revenue per Average Subscriber increased to $80 in Q3 2025, up from $67 in Q3 2024, indicating increased customer value.
• Strategic acquisitions of Zava Global GmbH for international expansion and CS Bio Co. manufacturing assets to strengthen the supply chain.
• Positive net income of $107.8 million for the nine months ended September 30, 2025, and robust net cash provided by operating activities of $238.7 million.
• Enhanced liquidity position with $1.1 billion in cash, cash equivalents, and investments as of September 30, 2025.
• The One Big Beautiful Bill Act (OBBBA) permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures, making them fully deductible, and extends full expensing of qualifying assets through accelerated bonus depreciation.

Negatives

• Net income for the three months ended September 30, 2025, decreased significantly by 79% to $15.8 million, compared to $75.6 million in Q3 2024.
• Gross margin declined to 74% in Q3 2025 (from 79% in Q3 2024) and 75% for the nine months (from 81% in 9M 2024), primarily due to newer offerings having higher product and packaging costs, increased shipping costs, and shorter shipping cadences.
• Operating expenses increased across all categories for Q3 2025: Marketing up 27% to $232.2 million, Operations and Support up 62% to $76.8 million, Technology and Development up 92% to $40.6 million, and General and Administrative up 81% to $80.7 million.
• A loss from the change in fair value of liabilities of $7.6 million was recognized in Q3 2025.
• The benefit from income taxes was substantially lower in Q3 2025 ($3.6 million) compared to Q3 2024 ($52.0 million), as the prior year included a significant release of a domestic valuation allowance.
• The company still carries an accumulated deficit of $134.4 million as of September 30, 2025.

Risks

• Rapid growth may not be sustained or generate a corresponding improvement in results of operations.
• Inability to maintain profitability in future fiscal periods.
• Results of operations and key metrics may fluctuate significantly on a quarterly and annual basis.
• Failure to expand or maintain the scope of offerings, including products, services, Provider network, and treatable conditions.
• Inability to successfully market to new customers and retain existing customers, or evolving privacy/healthcare laws limiting marketing activities.
• Operating in highly competitive markets with large, well-established healthcare providers, retailers, pharmaceutical companies, and technology companies.
• Failure to effectively maintain, promote, and enhance the brand in a cost-effective manner.
• Dependence on relationships with Affiliated Medical Groups, which are not owned by the company, and potential disruption of these relationships.
• Inability of Affiliated Medical Groups to attract and retain high-quality Providers.
• Activities and quality of Providers, Facilities, or third-party suppliers could damage the brand, lead to liability, and harm business.
• Failure to offer high-quality customer support may adversely affect customer and Provider relationships.
• Providers could be classified as employees of Affiliated Medical Groups instead of independent contractors, leading to significant additional expenses.
• Acquisitions and investments could result in operating difficulties, dilution, and other harmful consequences.
• Expansion into international markets faces additional business, political, legal, regulatory, operational, financial, and economic risks.
• Economic uncertainty or downturns, particularly as they impact specific industries, could adversely affect business.
• Inability to deliver a rewarding experience on mobile devices may impair customer attraction and retention.
• Dependence on continued and unimpeded access to the internet and mobile networks.
• Disruption of service at Amazon Web Services, Partner Pharmacies, or other third-party service providers could interrupt platform access.
• Dependence on a number of third parties (Affiliated Medical Groups, Facilities, Partner Pharmacies, Manufacturing Suppliers) for critical functions.
• Disruption in the global supply chain, supply chain concentration (e.g., one GLP-1 supplier), and changes to tax or trade policy.
• Pharmacy business subjects the company to additional healthcare laws and regulations, increasing compliance complexity.
• Payments system depends on third-party service providers and is subject to evolving laws and regulations.
• Pricing decisions may adversely affect the ability to attract new customers, Providers, and partners, or impact revenue and profitability.
• Loss of key management team members could severely disrupt the business.
• Inability to hire, integrate, develop, motivate, and retain personnel, particularly in specialized areas like engineering and AI.
• Damage or disruption at key inventory storage facilities (Ohio, Arizona, MedisourceRx) or with third-party logistics providers.
• Failure to comply with applicable healthcare and/or other laws and governmental regulations could lead to substantial penalties.
• Business practices found to violate federal or state anti-kickback, physician self-referral, or false claims laws could incur significant penalties.
• Legislative and regulatory changes specific to telehealth or pharmacy law may create additional requirements and costs.
• Evolving government regulations and enforcement activities may require increased costs or adversely affect results of operations.
• Changes in public policy, including those that mandate or enhance healthcare coverage, could materially affect business.
• Products and third-party suppliers are subject to FDA regulations and other requirements; failure to comply could impair order fulfillment.
• Subject to fines, penalties, and injunctions if determined to be promoting unapproved uses, unapproved drugs, or in a false/misleading manner, or if compounded products (e.g., GLP-1s) do not meet exemption requirements.
• Information provided to Providers, customers, and partners could be inaccurate or incomplete, leading to liability.
• Use, disclosure, and processing of personally identifiable information, including health information, is subject to privacy and security regulations; failure to comply could result in significant liability.
• Public scrutiny of internet privacy and security issues may result in increased regulation or enforcement.
• Security breaches, loss of data, and other disruptions could compromise sensitive information and expose the company to liability.
• Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws could subject the company to penalties.
• Failure to protect or enforce intellectual property rights could harm business and results of operations.
• Future claims of violating intellectual property rights of others, which are costly to defend.
• Subject to legal proceedings in the ordinary course of business, including intellectual property disputes, marketing claims, securities class actions, and derivative lawsuits (e.g., FTC investigation).
• Changes in accounting rules, assumptions, or judgments could materially and adversely affect the company.
• Risk of product liability claims and potential inability to maintain or obtain adequate insurance.
• Business could be disrupted by catastrophic events and man-made problems, such as power disruptions, data security breaches, and terrorism.
• Requirements of being a public company may continue to strain resources, divert management's attention, and result in litigation.
• Dual class common stock structure concentrates voting power with the Chief Executive Officer and Co-Founder, Andrew Dudum.
• The market price of Class A common stock may be volatile.
• The sale or the perception of future sales of a substantial number of shares of Class A common stock could cause the market price to drop significantly.
• Reports published by analysts, including projections that differ from actual results, could adversely affect the market price and trading volume.

Future Outlook

The company expects revenue from personalized offerings, including existing and new offerings, to increasingly drive Online Revenue growth in the future. It plans to continue investing significantly in fulfillment, distribution, operating capabilities, marketing to acquire new customers, and product offerings to enhance customer experience. Management anticipates that total marketing expenses and general and administrative expenses as a percentage of revenue will decrease over the long term due to additional marketing leverage, maturation of the existing subscriber base, and disciplined headcount growth. The weight loss specialty is expected to introduce new seasonality, potentially leading to higher subscriber and Monthly Online Revenue per Average Subscriber growth in the first quarter. Management believes existing cash resources and the Revolving Credit Facility are sufficient to support planned operations for the next 12 months.

Management Comments

• Our mission is to help the world feel great through the power of better health.
• We believe that we have the technical platform, distributed provider network, and access to clinical capabilities to lead the migration of routine office visits to a personalized, digital, accessible format.
• We expect revenue from personalized offerings, including existing and new offerings, to increasingly drive Online Revenue growth in the future.
• We do not anticipate launching new material partnerships in the foreseeable future or investing significantly in specialized wholesale marketing campaigns.
• We continuously test and optimize the online experience and offerings to improve the customer experience, maximize sales, and improve gross margin.
• We expect to retain a significant majority of revenue from Subscribers who maintain a Subscription for more than two years (sometimes referred to by us as long-term revenue retention).
• We expect to continue to focus on long-term growth.
• In the short term, we expect these investments to increase our operating expenses; however, in the long term, we anticipate that these investments will positively impact our results of operations.
• We expect technology and development expenses may increase in the foreseeable future as we grow our business and continue to invest in our platform and new offerings and stabilize over the long term.
• We anticipate G&A will decrease as a percentage of revenue over the long term, in part due to our expected execution of disciplined headcount growth and overall expense management.
• We believe our existing cash resources, as well as availability under our Revolving Credit Facility, are sufficient to support planned operations for the next 12 months.

Industry Context

The healthcare industry is undergoing significant structural change and consolidation, with demand for telehealth and personalized healthcare driven by rising traditional healthcare costs, access difficulties, patient stigma, and technological advancements. The market for the company's model is new, rapidly evolving, and intensely competitive. The GLP-1 market faces elevated consumer demand, regulatory limitations, and supply chain constraints, with increased scrutiny on compounding pharmacies. The regulatory landscape for GLP-1s is rapidly evolving, including the FDA's resolution of the semaglutide shortage and the conclusion of enforcement discretion for 503B outsourcing facilities, which impacts the company's ability to offer compounded semaglutide.

Management Changes

Legal Proceedings

• Two putative securities class action lawsuits (Sookdeo v. Hims & Hers Health, Inc., et al., No. 25-cv-05315 and Yaghsizian v. Hims & Hers Health, Inc., et al., No. 25-cv-05321) were filed on June 25, 2025, alleging securities law violations related to alleged misrepresentations regarding business, operations, and prospects, particularly with Novo Nordisk. The company does not currently consider a loss on these lawsuits to be probable.
• Three putative shareholder derivative lawsuits (Jones v. Dudum, et al., No. 25-cv-5866; Herman v. Dudum, et al., No. 25-cv-6326; Popper v. Dudum, et al., No. 25-cv-7337) were filed on July 14, 2025, July 29, 2025, and August 29, 2025, respectively. These actions relate to the matters alleged in the Securities Actions and allege breaches of fiduciary duty by individual defendants. The company is a nominal defendant and does not currently consider a loss on these lawsuits to be probable.
• The Federal Trade Commission (FTC) issued a Civil Investigative Demand in October 2023, requesting information as part of a non-public investigation. The FTC has not communicated any potential conclusions or findings, and the company does not expect the outcome to have a material impact on its business or operations.

Related Party Transactions

• Payments of $2.7 million were made to Woolly Labs, Inc. (d/b/a Vouched) for identity verification services during the nine months ended September 30, 2025. Vouched ceased to be considered a related party as of July 1, 2025, due to an executive leadership change.

Stakeholder Impact

• Shareholders: Potential for stock price volatility due to mixed financial results and ongoing legal proceedings. Concentrated voting power with the CEO limits influence on major corporate transactions. Potential dilution from convertible notes, partially offset by share repurchase program.
• Customers: Expanded access to personalized offerings, including weight loss solutions, and international markets. Potential impact from supply chain constraints for GLP-1 products and the evolving regulatory landscape for compounded medications.
• Employees: Continued stock-based compensation and potential for increased headcount due to business growth. Impact of remote-first policy and intense competition for skilled talent, particularly in engineering and AI.
• Suppliers/Partners: Continued dependence on Affiliated Medical Groups, Partner Pharmacies, and Manufacturing Suppliers. Potential for disruptions in these relationships or the supply chain, especially for GLP-1s.
• Creditors: Issuance of $1.0 billion convertible senior notes and establishment of a $175.0 million revolving credit facility, increasing overall debt obligations.

Next Steps

• Finalize the preliminary purchase price allocation for the Zava Global GmbH acquisition by the third quarter of 2026.
• Continue investments in the expansion of current Facilities (Pharmacies, laboratory testing facilities, peptide manufacturing facility) for at least the next 12 months.
• Continue to make significant investments in marketing to acquire new customers and in product offerings and customer experience.
• Evaluate the likelihood of achieving performance metrics for CEO stock options and Performance Restricted Stock Units (PRSUs) on a quarterly basis.
• Begin including expanded income tax disclosures within the Form 10-K for the year ended December 31, 2025, in accordance with ASU 2023-09.
• Evaluate the method of adoption and the impact of ASU 2024-03 and ASU 2025-06 on consolidated financial statements and related disclosures.
• Transition XeCare, LLC to a wholly-owned subsidiary, expected to be completed this year.
• Assess the implications of the One Big Beautiful Bill Act (OBBBA) on actual results through the end of 2025.
• Continue to focus on international expansion, which may increase exposure to foreign currency exchange risk.
• May use cash and cash equivalents to repurchase up to $55.5 million of Class A common stock through August 31, 2027, under the 2024 Share Repurchase Program.
• Made a cash payment of approximately $20.0 million in October 2025 related to a strategic investment in equity securities.

Key Dates

Recommendation

While Hims & Hers demonstrates robust revenue and subscriber growth, driven by strategic acquisitions and personalized offerings, the significant decline in quarterly net income and gross margin raises concerns about short-term profitability and cost management. The company is making substantial investments in growth and infrastructure, which are expected to yield long-term benefits, but these are currently impacting operating expenses and margins. The ongoing legal proceedings and regulatory scrutiny, particularly around compounded GLP-1s, introduce additional uncertainty. Given the mixed financial signals—strong top-line growth versus a dip in quarterly profitability—and the inherent risks in a rapidly evolving and highly regulated industry, a 'hold' recommendation is appropriate. Investors should monitor the company's ability to translate revenue growth into sustainable profitability and manage regulatory and competitive pressures.

Keywords

Telehealth, Digital Health, Online Pharmacy, Personalized Medicine, Weight Loss, GLP-1, Compounding Pharmacy, Healthcare Technology, Direct-to-Consumer, Hims & Hers, SEC Filing, Quarterly Report, Financial Results, Acquisitions, Convertible Notes, Share Repurchase