Hims & Hers Gross Margin Falls to 57% as It Lowers Full-Year Profit Forecast
Key Facts
Hims & Hers reported third-quarter 2026 results, with gross margin falling to 57% from 74% a year earlier as the cost of revenue rose 143% to $381.2 million. The company said in its results statement that the cost of revenue included higher costs for products, packaging, shipping and medical consultations. The quarter saw growth in revenue from the United States and the rest of the world, alongside declines in free cash flow and operating cash compared with the same period. The company also lowered its full-year adjusted earnings forecast range while keeping its annual revenue estimates within the previously announced range. Reuters reported that the stock fell more than 3% in volatile trading after the market closed on November 9.
The cost of revenue rose from $156.9 million in the third quarter of 2025 to $381.2 million in the same period of 2026. The company attributed the increase to higher costs for products and packaging, up 176%; shipping, up 64%; and services related to medical consultations, up 32%. In its report, the company said the increase was driven mainly by weight-loss offerings, business growth and acquisitions. Gross margin, meanwhile, fell 17 percentage points, from 74% to 57%. The divergence puts revenue expansion under clear pressure from the cost of delivering products and services.
By geography, U.S. revenue was $657.1 million, up 21% from $543.5 million a year earlier. The company said Hers weight-loss and dermatology offerings drove growth in the U.S. market. Revenue from the rest of the world rose to $233.3 million from $55.5 million, a 321% year-over-year increase. The company attributed most of the growth in international revenue to geographic expansion tied to recent acquisitions, including Eucalyptus. The acquisition of the company closed in June 2026, according to Hims & Hers’ report filed with the U.S. Securities and Exchange Commission.
Adjusted earnings before interest, taxes, depreciation and amortization improved to $82.4 million in the third quarter of 2026, compared with $78.4 million in the same period of 2025. But free cash flow fell to $26.0 million from $79.4 million, while cash generated from operating activities declined to $65.4 million from $148.7 million. The comparison shows a divergence between the improvement in adjusted earnings and the decline in cash generated during the quarter. Higher adjusted earnings did not prevent continued pressure on cash flow compared with the previous year. These indicators come in a quarter when geographic expansion coincided with a sharp rise in the cost of revenue.
Subscribers totaled 2.788 million at the end of the quarter, compared with 2.471 million at the end of the third quarter of 2025, a 13% annual increase. Average monthly revenue per subscriber rose to $105 from $81, a 30% increase. The chief financial officer said the company deliberately moderated the pace of marketing spending ahead of planned platform expansions in the fourth quarter. He added that the move "will position us well as we enter 2027." The company thus links its current spending management to plans to expand the platform before entering next year.
For the fourth quarter of 2026, the company expects revenue of between $875 million and $895 million and adjusted earnings before interest, taxes, depreciation and amortization of between $70 million and $90 million. The expected earnings range implies an adjusted margin of between 8% and 10%. For 2026, it expects revenue of between $3.13 billion and $3.15 billion and adjusted earnings of between $257 million and $277 million, with a margin of between 8% and 9%. Reuters reported that the stock fell more than 3% after the close on November 9, while no specific figure for analysts’ fourth-quarter revenue estimates was confirmed. Investing.com reported that Needham maintained its "Buy" rating on the stock and cut its price target to $32 from $42; the report about the research firm was attributed to the outlet.