Hims & Hers (HIMS) Q3 2026 earnings review
Hims & Hers sales jump 49%, but its profit outlook falls again
Hims & Hers, the online seller of prescription and wellness treatments, grew revenue rapidly through overseas acquisitions while its profit margins shrank. Total sales jumped 49% from a year ago as domestic revenue rose 21%, but gross margin dropped 17 percentage points to 57% and the company swung to a net loss. Finance chief Yemi Okupe lowered the middle of the full-year profit outlook to $267 million, leaving fourth-quarter targets well below what the prior plan pointed to by our math.
| United States revenue | $657.1M +21% from a year ago |
|---|---|
| Subscribers | 2.79M -103,000 from last quarter |
| Gross margin | 57% 74% a year ago |
| Full-year Adjusted EBITDA outlook | Cut $33M middle of the range: $267M |
⚖️ Verdict: 🔴 Bearish
The story got worse because the promised second-half profit rebound did not arrive and the customer count shrank by 103,000 from last quarter. Management cut its full-year Adjusted EBITDA forecast for a third consecutive quarter even after revising the metric to exclude $4 million of currency losses. One positive: holding back marketing spend and collecting higher monthly revenue per customer returned free cash flow to positive territory at $26 million.
The question now is whether higher-priced domestic treatments can offset the margin drag from break-even international acquisitions and shrinking subscriber counts. Either fourth-quarter launches restart subscriber additions and lift margins, or growth relies on acquisitions funded by $563 million in remaining installment debt. Fourth-quarter subscriber numbers and initial 2027 margin targets will settle it.
🐂 Bull Case
US Sales Accelerated as Customer Spend Jumped
Hims & Hers sells prescription and wellness treatments online in the United States, its largest market. In March 2026, the company shifted its domestic weight-loss business toward name-brand GLP-1 drugs while "offering access to compounded GLP-1 medications through our platform on a limited scale". That transition is now lifting domestic revenue and average customer spending.
- United States revenue: $657.1 million, up 20.9% from a year ago after growing 15.7% last quarter
- Monthly revenue per average subscriber: $105, up 29.6% from $81 a year ago and up from $92 in the second quarter
- United States revenue over the first nine months: $1.81 billion, up 9.0% from a year ago
The faster domestic growth matters because international acquisitions did not contribute to the United States segment. Higher prices on name-brand weight-loss drugs and multi-condition treatment plans are generating more revenue from each customer, allowing domestic sales to grow by $35.3 million from last quarter even as the total subscriber count fell.
What to watch: United States revenue and monthly spend per subscriber in the fourth-quarter report. Another quarter above $100 per month would show that higher-priced weight-loss cohorts are staying on the platform.
Lower Marketing Share Restored Positive Free Cash Flow
Finance chief Yemi Okupe said the telehealth group delivered its third-quarter growth while "intentionally pacing marketing spend ahead of several planned expansions to our platform in the fourth quarter". Advertising and customer acquisition costs fell to 27.8% of revenue from 38.8% a year ago, a drop of 11.0 percentage points that cushioned the fall in gross margin.
Holding marketing dollars down to $247.3 million—down $15.0 million from the second quarter—helped operating cash flow rebound to $65.4 million after burning $35.9 million last quarter. Free cash flow reached $26.0 million, returning the second half to cash generation as Okupe had planned, though free cash flow remained 67.3% below last year's $79.4 million.
What to watch: fourth-quarter marketing expense as a share of revenue. Okupe plans to step up spending for new launches in the fourth quarter, which will test whether cash flow stays positive when advertising resumes.
Positives this quarter didn't test
Chief executive Andrew Dudum highlighted "expanding the treatments and specialties we make available" alongside "rolling out an AI-native experience to support every customer’s care", but the earnings release gave no metrics on two product drivers.
- Testosterone and peptide launches: management planned to launch injectable and oral testosterone plus peptide therapies (Sermorelin, Glutathione, and NAD+) before year-end 2026; fourth-quarter launch confirmation will test this.
- Artificial intelligence customer support: no support-cost savings were broken out in the release, and operations and support costs stayed near 12% of revenue; full-year margin commentary will test whether AI tools lower service costs.
🐻 Bear Case
Acquisition Mix Crushed Margins and Cut Profit Plans
"Revenue grew 49% year-over-year, our second consecutive quarter of acceleration, with domestic revenue up 21% year-over-year and international revenue up more than 300% year-over-year," finance chief Yemi Okupe said. Overseas growth via the June acquisition of Eucalyptus and name-brand weight-loss partnerships are the core growth drivers, but that same expansion is eroding profitability.
- Rest of the World revenue: $233.3 million (26.2% of total sales), up from $55.5 million a year ago
- Gross margin: 57.2%, down 16.6 percentage points from 73.8% a year ago as cost of revenue jumped to 42.8% of sales
- Full-year Adjusted EBITDA outlook: cut to $257–277 million from $275–325 million last quarter, the third reduction this year
- Definition change: Hims & Hers revised Adjusted EBITDA to "include foreign currency gains and losses, net as a result of our recent international expansion", adding $4.1 million to third-quarter profit
Okupe had predicted that older weight-loss customer cohorts would drive a sharp second-half profit step-up, with the prior outlook pointing to about $110 million of fourth-quarter Adjusted EBITDA by our math. Instead, the new fourth-quarter plan calls for $70–90 million, and the company swung to a $33.0 million GAAP net loss in the third quarter.
What to watch: fourth-quarter gross margin and initial 2027 Adjusted EBITDA margin targets. Further gross margin declines below 57% would put the long-term 2030 target of a 20% Adjusted EBITDA margin further out of reach.
Total Subscribers Shrank From the Second Quarter
Subscribers are customers who agree to recurring billing for prescriptions and wellness products, excluding one-time buyers. While the press release highlighted that subscribers grew 12.8% from a year ago to 2.79 million, the customer count already included buyers from the Eucalyptus acquisition at the end of June.
By our math, the subscriber base shrank by 103,000 people from the second quarter's 2.89 million—a 3.6% drop over three months, compared with an addition of 32,000 subscribers in the same quarter last year. The drop coincided with Okupe holding back marketing spend and tests whether the initial wave of name-brand weight-loss buyers is churning faster than older cohorts.
What to watch: net new subscribers in the fourth quarter once marketing spend ramps back up for new launches. A second straight quarterly drop in subscribers would show that revenue growth relies entirely on price increases and acquisitions.
Installment Payments and Rebate Receivables Drain Liquidity
Hims & Hers bought Eucalyptus largely on credit and funds drug manufacturer rebates through its balance sheet. During the third quarter, the company paid $130.3 million in cash for its first deferred acquisition installment and $43.7 million for acquisition earn-outs, while repurchasing zero shares under its buyback plan.
Even after that payment, deferred acquisition payables stand at $563.1 million ($478.6 million due within a year), which the company can settle in cash or up to 19.9% of its Class A stock. Meanwhile, net receivables rose to $427.8 million from $32.1 million at the end of 2025, absorbing $323.9 million of operating cash flow over the first nine months.
What to watch: whether the next Eucalyptus installment in the fourth quarter is paid in cash or newly issued shares. Settling in shares would dilute existing holders on top of $1.37 billion in convertible debt.
Risks this quarter didn't answer
Four standing legal, regulatory, and disclosure risks received no new figures in the third-quarter earnings release.
- Federal Trade Commission lawsuit: no new legal contingency charges were recorded in the third quarter ($62.5 million accrued year-to-date); the quarterly 10-Q filing's legal footnote will show any litigation progress or changes to auto-renewal flows.
- Reliance on Novo Nordisk and Eli Lilly: the release gives no update on drug supply terms or competition from manufacturer direct-to-consumer sites; fourth-quarter gross margin will reflect any pricing pressure.
- Weight-loss and Eucalyptus revenue split: management again omitted standalone GLP-1 revenue and organic international growth; the 10-Q filing's geographic and acquisition notes will test how much of the 321% overseas growth was acquired.
- Compounding and peptide regulations: no update on Food and Drug Administration category rulings for the Menlo Park peptide facility; year-end product launch disclosures will show what treatments are permitted.
💲 Other KPIs
Overhead costs nearly doubled, rising 87.8% from $80.7 million a year ago. General and administrative spending climbed to 17.0% of revenue from 13.5% in the third quarter of 2025, driven by $22.8 million of acquisition and earn-out expenses and $36.9 million of stock-based pay. Excluding those items, overhead still grew 83.3% to $91.7 million.
Deferred revenue—cash customers have paid upfront for treatments not yet delivered—edged up 1.9% from $141.4 million in the second quarter and is up 13.3% from $127.2 million at the end of 2025. The balance stabilized after falling 14.4% in the second quarter when US weight-loss plans shifted toward monthly billing.
The basic share count rose 3.3% from 226.3 million a year ago and increased by 2.1 million shares from the second quarter, reflecting employee stock awards and acquisition issuances. Because the telehealth group posted a GAAP net loss of $33.0 million, diluted shares equaled basic shares and excluded convertible notes.
🔮 Guidance
Cut. Management narrowed the range and lowered the middle of the outlook by $60 million to $3.14 billion, or 33.8% growth for the year. After raising the target by $300 million last quarter when adding the Eucalyptus acquisition to the count, the company trimmed the top end by $150 million with one quarter left.
Cut. The middle of the profit outlook dropped by $33 million to $267 million, representing an 8% to 9% margin and a 16.0% decline from 2025. It is the third consecutive reduction to the full-year profit plan, with the middle of the range moving down each quarter: -$25.0M, -$12.5M, and -$33.0M.
New. The plan calls for $885 million at the middle of the range, up 43.3% from a year ago on the inclusion of Eucalyptus, but down 0.6% from the third quarter. By our math, the prior full-year outlook had pointed to about $949 million in fourth-quarter sales, so the fourth-quarter target sits $64 million lower.
New. The fourth-quarter plan centers on $80 million (an 8% to 10% margin), up 20.6% from a year ago but down 2.9% from the third quarter as marketing spend rises for new launches. By our math, the previous full-year plan had implied about $110 million for the fourth quarter.
❓ Key Questions
Why did total subscribers fall by 103,000 this quarter?
Subscribers dropped from 2.89 million in June to 2.79 million in September. Management did not disclose whether the decline came from US weight-loss churn, lower marketing spend, or subscriber cleanup at acquired overseas brands.
How much did international sales grow without Eucalyptus?
Rest of the World revenue rose 321% to $233.3 million in the first full quarter after buying Eucalyptus. Without a standalone figure for Eucalyptus, investors cannot tell if existing European and Canadian operations accelerated or slowed.
Will the remaining $563M acquisition debt require issuing stock?
Hims & Hers paid the first $130.3 million Eucalyptus installment in cash, leaving $478.6 million due over the next twelve months and $84.5 million later. Management has the option to settle up to 19.9% of its shares instead of paying cash.
Did selling rebate receivables help third-quarter operating cash flow?
Net receivables climbed to $427.8 million by September, while accounts payable rose by $351.2 million over nine months. The release does not state how much cash came from the $400 million receivables purchase facility arranged in July.