Shares of Hims & Hers Health (HIMS) fell sharply in premarket trading on Tuesday after the telehealth company reported weaker-than-expected first-quarter revenue and a surprise loss.
The stock dropped around 15% before the opening bell after the company said changing dynamics in its GLP-1 weight-loss business had hurt margins and disrupted sales recognition during the quarter.
Hims & Hers said it had strategically shifted toward selling branded GLP-1 treatments instead of compounded versions, a move that increased restructuring costs and temporarily pressured its financial performance.
The company also said shorter shipping schedules for certain weight-loss products affected the timing of revenue recognition in the US market, weighing on quarterly topline growth.
Analysts described the latest quarter as a transition period for the telehealth provider as it adapts to changing regulatory and competitive conditions in the fast-growing obesity treatment market.
Transition pressures hit profitability
Hims & Hers reported a loss of 40 cents per share for the three months ended March 31, compared with analyst expectations for a profit of 4 cents per share, according to LSEG data.
Chief Financial Officer Yemi Okupe said the loss was driven largely by write-downs tied to ingredients used in compounded semaglutide products, along with one-time legal and merger-related expenses.
Semaglutide is the active ingredient in blockbuster obesity treatments, including Wegovy and Ozempic.
The company had previously benefited from strong demand for compounded GLP-1 drugs, which were typically sold at lower prices than branded alternatives such as Wegovy and Zepbound.
However, the US Food and Drug Administration has tightened restrictions around compounded versions of GLP-1 drugs as shortages of branded treatments began easing.
Earlier this year, the regulator referred Hims & Hers to the Department of Justice over potential violations related to compounded GLP-1 products, triggering a sharp decline in the company’s shares.
Drugmakers reclaim market share
Investors have increasingly questioned whether Hims & Hers can maintain its rapid growth as major pharmaceutical companies attempt to regain market share lost during the supply shortages.
In February, Novo Nordisk sued Hims & Hers for alleged patent infringement linked to compounded weight-loss drugs.
The Danish drugmaker later agreed in March to drop the lawsuit after Hims committed to selling branded Ozempic and Wegovy products through its online pharmacy platform.
The transition toward branded drugs is expected to weigh on margins in the near term, though Hims said it anticipates returning to profitability by 2027.
Leerink Partners analyst Michael Cherny described the quarter’s results as soft and reflective of an ongoing operational transition.
Outlook remains upbeat
Despite the disappointing quarter, Hims & Hers issued revenue guidance that exceeded Wall Street expectations.
The company forecast second-quarter revenue between $680 million and $700 million, ahead of analysts’ consensus estimate of $643 million.
It also raised its full-year sales forecast to between $2.8 billion and $3 billion, up from prior guidance of $2.7 billion to $2.9 billion issued earlier this year.
Analysts at Citigroup described the outlook as “mixed,” noting that second-quarter guidance still fell below the bank’s own projections.
The forecasts exclude any contribution from Hims & Hers’ proposed acquisition of Australian telehealth provider Eucalyptus, which is expected to close in mid-2026.
Investor sentiment around the company has remained volatile in recent months.
Shares bottomed out in late February before rebounding strongly, gaining more than 100% since then amid investor enthusiasm surrounding peptides and weight-loss treatments.
Analysts at Morgan Stanley said the recent rally reflected a “push and pull” between concerns over weakening near-term fundamentals and excitement around new product categories and long-term growth opportunities in digital healthcare and obesity treatments.
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