Hims & Hers Faces Investor Scrutiny Amid Regulatory and Growth Challenges

Hims & Hers posts strong 2025 revenue growth but faces SEC investigation, patent lawsuit, and cautious 2026 outlook, pressuring the stock.

The telehealth company Hims & Hers Health, Inc. continues to post impressive growth metrics, yet investors are growing increasingly wary. A combination of legal entanglements, a regulatory probe, and a cautious near-term outlook are applying significant pressure to the stock, overshadowing otherwise solid financial performance.

Regulatory and Legal Hurdles Emerge

A significant new concern for shareholders was disclosed in the company's recent 10-K filing. In February, Hims & Hers received an inquiry from the U.S. Securities and Exchange Commission (SEC). The regulator has initiated an investigation and requested documents related to public statements concerning "compounded" semaglutide products, as well as associated business relationships. The company has stated it is cooperating with the SEC's fact-finding process.

This SEC scrutiny adds to existing legal complexities. Hims & Hers is already defending against a patent infringement lawsuit filed by Novo Nordisk related to compounded GLP-1 weight-loss medications. Furthermore, the company's compounded drug offerings have drawn attention following its decision to withdraw a compounded oral semaglutide pill after warnings from the U.S. Food and Drug Administration (FDA). Such proceedings demand considerable management time and financial resources, potentially weighing on the company's valuation regardless of operational growth.

Strong Financial Growth Meets a Cautious Forecast

Operationally, the company's results for the fourth quarter and full year 2025 were robust. Q4 revenue reached $617.8 million, a 28% year-over-year increase. For the entire 2025 fiscal year, total revenue hit $2.35 billion, representing substantial growth of 59%. The subscriber base also expanded, with the firm reporting over 2.5 million paying members by the end of 2025.

Profitability metrics showed similar strength. Adjusted EBITDA for the final quarter was $66.3 million, bringing the full-year figure to $318 million.

However, the company's guidance for the upcoming period tempered enthusiasm. For the first quarter of 2026, Hims & Hers anticipates revenue between $600 million and $625 million, a range that reportedly fell short of certain market projections. Management attributed this to headwinds from altered shipping cadences for its weight-loss products. For the full 2026 year, the company provided a revenue outlook of $2.7 billion to $2.9 billion, alongside an adjusted EBITDA forecast of $300 million to $375 million.

Major Acquisition and Market Reaction

On the strategic front, Hims & Hers is pushing forward with international expansion. It announced a definitive agreement to acquire the Australian telehealth provider Eucalyptus in a deal valued at up to $1.15 billion. Eucalyptus, which operates in Australia, the United Kingdom, and Germany, is reported to contribute an annual revenue run-rate exceeding $450 million. The transaction is expected to close around mid-2026, pending customary regulatory approvals.

Despite this growth-oriented move, the market's immediate reaction was negative. The stock declined by 9.78% to €11.89, marking a new 52-week low. Investor focus is now squarely on the development of the SEC investigation and the company's ability to recover from its softer short-term outlook as it works to integrate the sizable Eucalyptus acquisition later in the year.