Hims & Hers: Aggressive Growth Meets Market Skepticism

Hims & Hers US4330001060

The telemedicine provider Hims & Hers is accelerating its international expansion, yet investors remain cautious. While the company announces key acquisitions and a market entry into Canada, simultaneous margin pressure and regulatory challenges are tempering enthusiasm. The central question for shareholders is whether an aggressive growth strategy can sufficiently counterbalance structural risks within its core business.

Recent quarterly results underscore the company's current dilemma. For the third quarter of 2025, revenue surged an impressive 49% to $599 million, with the subscriber base climbing to nearly 2.5 million. However, this growth came at a cost: the gross margin contracted noticeably year-over-year, falling from 79% to 74%. This decline is a primary concern for investors, as it threatens to weigh on long-term profitability.

The stock's performance reflects this mixed picture. Although shares gained over 7% on a weekly basis, the broader trend remains strained. Trading at approximately €34, the equity is down almost 50% from its 52-week high reached in February.

A Dual-Pronged Strategic Expansion

The company's strategic focus is firmly fixed on growth. Its official entry into the Canadian market is being executed through the acquisition of the digital health platform Livewell. The move aims to establish a comprehensive weight management program, timed to coincide with the anticipated availability of generic semaglutid. To address Canada's widespread obesity challenge, a new regional leadership team has been installed.

In a nearly simultaneous move, Hims & Hers announced the purchase of Boston-based YourBio Health. This acquisition brings patented technology for painless blood collection using microneedles. The deal is expected to close in early 2026 and will be financed entirely from the company's own balance sheet.

Regulatory and Partnership Hurdles Loom

A significant regulatory overhang clouds the business model. The U.S. Food and Drug Administration (FDA) is increasingly scrutinizing compounded GLP-1 medications. Should the official shortage of semaglutid be declared over, the supply of these profitable alternative drugs could face restrictions. Compounding this issue, discussions with Novo Nordisk regarding a partnership for the branded product Wegovy have so far yielded no results.

Despite these immediate headwinds, management is adhering to its long-term targets, aiming for $6.5 billion in revenue by 2030. The realization of this vision will depend critically on how swiftly the new acquisitions in Canada and Europe can be integrated and whether margins can stabilize despite the costs of rapid expansion.