Hims & Hers Health reports quarterly loss amid regulatory challenges

Hims & Hers Health reported a second-quarter loss of $0.37 per share, marking a significant swing from the $0.17 profit recorded in the same period last year. The telehealth company’s gross margins also contracted, falling to 64 per cent from 76 per cent year-on-year. Following the release of the results, shares declined 3 per cent before trimming losses, with the stock down more than 4 per cent for the year.

The quarterly performance was heavily impacted by an $81 million one-time cost. This figure includes expenses related to the acquisition of the Australian-based digital health company Eucalyptus, restructuring costs associated with a strategic shift in the company’s weight-loss approach, and legal reserves tied to ongoing litigation with the Federal Trade Commission.

The results come as Hims & Hers Health continues to pivot away from compounded GLP-1 weight-loss drugs towards partnerships with pharmaceutical manufacturers. This strategic adjustment follows earlier volatility in the shares, which were weighed down by regulatory and legal risks surrounding the manufacturing of compounded medications earlier this year.

Regulatory scrutiny intensified on 29 July when the FTC filed a lawsuit alleging that the company shared private health data with advertisers Meta and Snap and made subscription cancellations difficult. Hims & Hers Health has rejected these claims, with Chief Financial Officer Yemi Okupe stating during the earnings call that the company is confident in its position and intends to defend it vigorously.

The outcome of the FTC litigation remains uncertain, and the long-term impact of the strategic pivot on future profitability has yet to be established. While the $81 million cost is described as one-off, the full extent of restructuring and legal liabilities may evolve as the company navigates these challenges.