Hims & Hers Health

Hims & Hers delivered a 38% increase in revenue and a 27% decline in adjusted EBITDA during the second quarter. Both figures landed ahead of management's guidance. Shares traded down after hours.

Why it matters: Growth momentum certainly looks like it's back in play for Hims as revenue outperforming the guidance midpoint and FactSet consensus by 9% and 8%, respectively, looks impressive. Total subscribers reached 2.9 million at the end of the quarter, up 19% year-over-year and 307,000 sequentially, the largest quarter-over-quarter growth since we started tracking the data four years ago. That said, margin concern worsened as the full-year outlook for the figure was lowered for the second quarter in a row. Gross margin was down roughly 1,300 basis points and continues its now four consecutive quarters of decline, as its weight-loss strategy shift and international expansion push costs higher. The ex-US market accounted for 17% of total sales, up from 1% last year, as contributions from both Eucalyptus (closed in June) and Zava are tracking well ahead of our expectations. But margin pressure from the portfolio shift, in our view, is more important in the near term for the Hims investment thesis, and the market seems to share the sentiment given the stock movement.

The bottom line: We maintain our $23 fair value estimate for no-moat Hims and see shares moderately overvalued. We think margin concerns and the FTC lawsuit from the last month are the two major near-term overhangs for the stock and reiterate our Very High Uncertainty Rating given the stock's volatility. We think marketing expenses saw a mild scale advantage from the platform, but it wasn't enough to offset the 700-basis-point decline in adjusted EBITDA margin. Compared to the original full-year guidance introduced at the end of 2025, the latest revenue guidance is 14% higher, while EBITDA guidance is 12% lower. EBITDA margin is now expected to land around 9%, down from 12% in the initial outlook.

We maintain our $23 fair value estimate for no-moat Hims. Our 2026 estimates of $2.9 billion in revenue and 10% adjusted EBITDA margin reflect low-teen subscriber growth, mid-single-digit monthly revenue per subscriber growth, and increased expenses to support a continued international push.

Over our 10-year forecast, we expect low-teens compound annual top-line growth and substantial margin expansion. We model subscribers to grow from 2.5 million at the end of 2025 to over 4.5 million by 2035, driving much of the revenue tailwind. As patients increasingly seek convenient, personalized healthcare, the broad-based telehealth space should benefit from secular tailwinds. We think Hims should maintain a healthy market share thanks to the brand equity and trust the firm built in recent years, supporting retention and attracting new customers.

That being said, our forecast falls short of management’s long-term targets. In May 2025, Hims announced 2030 guidance of at least $6.5 billion in revenue and $1.3 billion in adjusted EBITDA, implying a six-year revenue CAGR of 28% and margins rising from 12% in 2024 to 20%. By contrast, our model assumes $4.3 billion in revenue and roughly $720 million in adjusted EBITDA, or a margin of 17%. While we think the margin target is achievable by 2032, we are conservative on revenue, citing the challenges of maintaining double-digit growth at scale, competitive pressures, and uncertainty around new specialties.

We expect operating leverage from subscriber growth, improved cost management as new facilities scale, and stronger cross-selling. Recent acquisitions in 2024–25 expanded Hims’ manufacturing footprint, which should enhance gross margin through increased capacity and lower per-unit costs. On operating expenses, we model customer acquisition and marketing spending as a percentage of sales declining as subscriber growth drives more organic interest through brand recognition and word-of-mouth.

We assign Hims & Hers a no-moat rating because we do not believe the firm possesses any structural advantages sufficient to generate excess returns over the next 10 years.

Hims operates primarily on a subscription model, offering treatments in areas such as sexual health, hair loss, mental health, and weight loss. Customers select a condition and, if necessary, consult with healthcare professionals before starting treatment. The company’s portfolio consists largely of off-patent pharmaceuticals fulfilled through affiliated pharmacies, often in customized dosages designed to meet individual needs and reduce side effects. As of August 2025, the platform counts roughly 2.5 million subscribers, with more than 60% using at least one personalized solution. While Hims does not disclose subscriber retention, we estimate it at 65%-85%, with patients using personalized solutions at the higher end of the range.

Since going public in January 2021, Hims has delivered rapid growth, expanding from 290,000 subscribers at year-end 2020 to over 2.5 million by year-end 2025. Growth was fueled by rising demand for GLP-1s, strong marketing—including a 2025 Super Bowl ad—and increasing brand visibility across social media and word-of-mouth. These drivers not only supported subscriber growth but also helped the company achieve positive EBITDA, with adjusted margins improving from negative 5.5% in 2020 to 13.5% in 2025.

Despite this strong trajectory, we do not see evidence that Hims possesses a structural competitive advantage that warrants a moat rating. Barriers to entry in telehealth remain low, and new entrants can replicate Hims’ offerings with relative ease.

Reviewing Hims’ portfolio, we don’t see signs of revolutionary or meaningfully different products that a patient can only get from the platform and not from competing players. For instance, Hims’ hair care offerings largely repackage finasteride and minoxidil—off-patent ingredients found in Propecia and Rogaine—and various supplements. While Hims tries to differentiate itself by offering a mixed combination of these active ingredients and in different forms like chewables, topical sprays, and topical serums, we don’t see any material efficacy differences between Hims’ products and over-the-counter products. Furthermore, competing telehealth firms like Ro and Keeps also offer their own versions of finasteride/minoxidil combinations in similar, if not the same, dosages and forms, leaving patients with a variety of options. We think this curbs potential pricing power that Hims can attain over peers despite its brand presence, and our analysis is substantiated by the fact that near-identical products from Ro and Keeps carry similar prices. We reach a similar conclusion in categories such as sexual health and weight loss, where Hims’ offerings are not meaningfully distinct from peers.

We concede that Hims’ ROICs over the past three years look impressive, which could potentially point to signs of a moat, at least from a purely quantitative standpoint. The firm consistently generated an adjusted ROIC above 30% from 2022 to 2025, far exceeding our assumed WACC of 9%. However, we believe this paints an irregular and temporary picture as the firm benefited from unique tailwinds, including pandemic-driven adoption of virtual care in 2021 and a branded semaglutide shortage in 2024.

Looking ahead, we think these dynamics are unlikely to persist and expect both subscriber growth and ROIC to moderate as the base expands and competition intensifies. While Hims has looked to support growth via international expansion and new specialty entries, we don’t fully buy into the idea that these initiatives will provide a meaningful competitive advantage. We believe that Europe’s differing healthcare systems and regulatory hurdles could prove challenging to simply copy and paste the US model, and new specialties like hormone therapy and menopause care are not challenging for a peer to replicate. As a result, we expect ROIC to trend downward starting in 2025, reaching around 10% by our midcycle year.

An increasing shift to digital healthcare underpins long-term growth potential for Hims’ subscribers.

Hims targets one to two new specialty entries every year. With a proven track record of cross-selling across its subscribers, new therapies should offer further growth opportunities.

Geographic expansion into markets like Western Europe widens Hims’ total addressable market, and management can apply findings from the US market to effectively target and win new subscribers.

By providing weight-loss offerings after the end of the branded semaglutide shortage, albeit at personalized doses, Hims runs the risk of legal actions from big pharmaceutical counterparts like Novo Nordisk as well as regulatory actions from the FDA.

Failure to optimize customer acquisition costs could weigh down subscriber growth and put pressure on margin, two figures crucial to Hims’ long-term targets.

Barriers to entry in the telehealth space are low, and newcomers as well as existing players could steal future patients and limit Hims’ long-term growth potential.