Shares of Hims & Hers Health plunged about 15% in premarket trading after the telehealth company missed first-quarter revenue expectations and reported a surprise loss, management said. The weak results were tied to a strategic shift in the quarter toward branded GLP-1 weight-loss drugs, which the company said put pressure on margins and domestic sales.
Hims & Hers described a change in shipping cadence to shorter schedules that prompted an alteration in the timing of revenue recognition for certain weight-loss products, a move the firm said reduced its U.S. topline for the period. The company characterized the results as occurring during a transition period and flagged restructuring costs tied to its move from compounded GLP-1 versions to branded treatments.
Analyst Michael Cherny of Leerink Partners described the quarter as soft and consistent with a transition-phase impact on the business. Company guidance indicated that while the pivot to branded GLP-1 therapies will create near-term costs, Hims & Hers expects to return to profitability in 2027.
Previously, Hims & Hers had relied on compounded formulations of GLP-1 medicines, which are generally less expensive than branded options such as Wegovy from Novo Nordisk and Zepbound from Eli Lilly. The U.S. Food and Drug Administration moved to restrict compounding of look-alike GLP-1 products and referred the company to the Department of Justice over potential violations, a development that earlier this year drove the shares down by more than 10%.
For the quarter ended March 31, the company reported a loss of $0.40 per share. Consensus analyst estimates compiled by LSEG had pointed to an average expected profit of $0.04 per share for the period. Hims & Hers attributed the reported loss to write-downs on ingredients used to compound semaglutide, the active ingredient in Wegovy, as well as one-time legal and merger-related costs, according to Chief Financial Officer Yemi Okupe.
Context and market implications
The company said the transition to branded GLP-1 offerings from compounded versions is a deliberate strategic decision that introduces near-term restructuring costs and alters revenue timing. Management's forecast of a return to profitability in 2027 places the firm in a multi-year transition window during which sales, margins, and reported earnings may face continued pressure.
Investors reacted sharply to the quarterly numbers and the accompanying operational shifts, driving the premarket drop in the stock. The combination of regulatory action affecting compounding practices and the company's decision to favor branded therapies materially influenced both the quarter's results and recent stock volatility.