Hims & Hers Health, Inc. (HIMS) Earnings

Management highlights

- AI and Technology Investment * The company is building a fully AI-native platform (not just adding AI as a decorative feature) that integrates AI across the entire customer care journey, with clinicians retaining oversight of all clinical decisions, and AI handling routine non-clinical tasks to free up clinician time. * Early rollout of the new AI-powered experience for Hers weight loss customers drove 3x higher customer messaging volume, with AI answering 80% of customer questions, reducing non-clinical support team tasks by nearly 50%, and cutting reliance on external third-party AI customer support vendors (with a goal to fully exit these contracts over time). * The company is accelerating AI investment, including opening a new AI R&D lab in Menlo Park, California, and expects AI investments to pay for themselves within 12-18 months via cost savings and higher customer retention. * AI improves clinical outcomes by flagging issues like dosage adjustments faster for clinician review, and leverages the company's 9 years of closed-loop outcome data from millions of customers to deliver personalized care that general-purpose LLMs cannot match. - Category Expansion & Clinical Infrastructure * The company has built end-to-end vertical infrastructure including over 1 million square feet of pharmacy and lab testing facilities, deep sterile compounding expertise, and global distribution, enabling faster, lower-cost entry into more complex care categories than competitors. * Testosterone replacement therapy (TRT) is scaling faster than any new specialty other than weight loss three quarters after launch, with plans to launch injectable and oral TRT before the end of 2026. * The company is preparing for a potential launch of new compounded peptides following FDA rulemaking: it has already started stability and validation testing of APIs for six peptides recommended by the FDA's PCAC committee at its U.S. manufacturing facility, and plans to launch already allowed peptides (including sermorelin, glutathione, and NAD+) by the end of 2026. * A new Chief Medical Officer with deep expertise in hormonal health, longevity, and peptide therapy has joined to support expansion into these higher-complexity categories. - Global Expansion via Acquisition * The company closed its largest ever acquisition, Eucalyptus, in June 2026, expanding to three international markets outside the U.S. that are each pacing above a $100 million annual run rate, making Hims & Hers the leading global consumer telehealth platform. * The acquisition adds immediate market leadership in weight loss across the UK, Australia, Germany, Japan, and Canada, with low-hanging fruit to expand existing Hims & Hers domestic specialties (including sexual health, hair care, hormonal health, and peptides) into these new markets. - Operational & Financial Efficiency * Marketing spend as a percentage of revenue improved 5 percentage points year-over-year and 2 percentage points quarter-over-quarter to 34%, driven by stronger retention, higher organic cross-sell, and years of brand investment lowering customer acquisition costs. * AI deployment is already driving early cost savings in customer support and pharmacy operations, with operations and support costs delivering 3 percentage points of sequential operating leverage in Q2. * The company ended Q2 with over $840 million in cash and short-term investments, supplemented by a new $400 million receivables facility and $400 million convertible debt offering to support growth, and has $225 million remaining in its share repurchase program.

Guidance

- Q3 2026: Revenue is guided to $880-$900 million, representing 47%-50% year-over-year growth. Adjusted EBITDA is guided to $75-$95 million, for a 10% adjusted EBITDA margin at the midpoint. - Full year 2026: The company upwardly revised its revenue guidance to $3.1-$3.3 billion, representing 32%-41% year-over-year growth. Adjusted EBITDA is guided to $275-$325 million, for a 9% adjusted EBITDA margin at the midpoint. International revenue is expected to hit at least $600 million for the full year, operating at or near break-even. - The company reaffirmed its long-term 2030 financial ambitions of at least $6.5 billion in total revenue and $1.3 billion in adjusted EBITDA, implying a 20% adjusted EBITDA margin. - The company expects to resume positive free cash flow generation in the second half of 2026, following working capital increases from expanding branded weight loss offerings in Q2.

Segment performance

1. Domestic segment: Generated $622 million in Q2 2026 revenue, with 16% year-over-year growth. Domestic revenue contributed 82.6% of total Q2 revenue. Five U.S. specialties already operate above a $100 million annual run rate, and testosterone is on track to become the sixth U.S. specialty to hit this threshold. Five U.S. specialties above a $100 million annual run rate contribute a large majority of domestic revenue. 2. International segment: Generated $131 million in Q2 2026 revenue, representing over 17-fold year-over-year growth, and contributed 17.4% of total Q2 revenue. The Eucalyptus acquisition closed in June 2026 and contributed $40 million of Q2 revenue, with existing international business growing 13% quarter-over-quarter organically. The UK, Australia, and Germany each already generate more than $100 million in annualized revenue, and Canada is on track to join this group. For full year 2026, international revenue is expected to reach at least $600 million, and will operate at or near break-even on an adjusted EBITDA basis as the company prioritizes scaling the segment. 3. Core specialty contribution: High-volume, high-growth specialties including weight loss and sexual health drive disproportionate value beyond direct revenue, supporting cross-selling, platform data expansion, and economies of scale across the entire business. Weight loss is the fastest growing specialty, while testosterone is the fastest growing specialty outside weight loss.

Risks & headwinds

- The FTC filed a complaint against the company on July 29, 2026, after three years of investigation and settlement negotiations. The company declined to accept settlement terms it says do not reflect facts or law, is defending its position vigorously, and accrued $81 million in non-recurring legal contingency costs (alongside acquisition and restructuring costs) in Q2. - Gross margins have compressed to 64% in Q2 (down 6 percentage points quarter-over-quarter) due to a strategic shift to higher proportions of lower-margin branded weight loss products and international revenue, and margins are expected to remain below historical levels through the second half of 2026 as this mix shift continues. - FDA rulemaking for new compounded peptides is an uncertain process with an unclear timeline, and the company cannot launch these peptides until the FDA completes its formal regulatory process. - International expansion requires continued investment, which will temporarily suppress international segment profitability as the company prioritizes scaling and market leadership.

Analyst Q&A

• Q: What is Hims & Hers' go-to-market timeline for peptides after the recent PCAC recommendations, and is the company ready to launch quickly after FDA guidance is issued? /

  A: The company has already completed significant preparation, including building clinical protocols, securing U.S.-manufactured API supply, and starting stability testing for six recommended peptides at its Menlo Park facility, so it will be able to launch very quickly after full final FDA rulemaking is complete. In the meantime, it will launch already allowed peptides including sermorelin, glutathione, and NAD+ by the end of 2026. The company will not launch the six PCAC-recommended peptides until the FDA completes its full formal regulatory process. (317 characters)

• Q: How is the partnership with Novo Nordisk progressing, and how does retention of branded weight loss cohorts compare to historical product retention? /

  A: The partnership is very strong both domestically and internationally: Hims & Hers is one of the largest distributors of Novo Nordisk's oral weight loss pill Wegovy, and helped generate large waitlists for Wegovy in new international markets following the Eucalyptus acquisition. Both companies are collaborating on data sharing to improve patient outcomes and commercialization of new therapies. Retention for branded weight loss cohorts is above expectations, and lower cancellation rates are already being seen for users of the new AI-enhanced care experience, with retention expected to improve further as the company gains efficiencies and lowers price points. (392 characters)

• Q: After the Eucalyptus acquisition, what are the key growth opportunities for international markets, and how will Eucalyptus impact full-year 2026 adjusted EBITDA? /

  A: Eucalyptus already has leading market share in weight loss across its existing markets, so the biggest opportunity is expanding high-performing Hims & Hers domestic specialties (including TRT, menopause care, hair care, sexual health, and peptides) into these existing international markets, which is low-hanging fruit with an established go-to-market infrastructure. Eucalyptus is expected to operate near or at break-even in 2026, consistent with prior guidance: the full-year EBITDA guidance reflects planned investment in international expansion to capture market leadership, not dilution from Eucalyptus underperformance. (384 characters)

• Q: Why did Hims & Hers roll out the new AI experience first on the Hers women's weight loss business, and what is the timeline for rolling it out to Hims and other categories? /

  A: The company started with Hers women's weight loss because it is one of the highest engagement, most complex categories with a high volume of customer questions around dosing, side effects, and injection fears, making it the ideal testing ground for the new integrated AI platform. The rollout has already delivered 3x higher customer engagement and 50% lower human support workload, and the AI experience will be rolled out to new category launches on the Hims side (including injectable and oral TRT and new peptides) over the next 2-3 quarters. (358 characters)