The growth story arrived on schedule. The profit story did not.
Hims & Hers Health, the online pharmacy that rode the weight-loss drug boom to record sales, reported a second straight quarterly loss on Monday even as revenue rose 38% from a year earlier to $753 million. The company’s shares have more than doubled over the past year on the strength of its GLP-1 business. The income statement has moved in the opposite direction.
The San Francisco company lost $86.3 million in the quarter ended June 30, slightly narrower than the $92.1 million it lost in the first three months of the year but still a heavy sum for a business selling $753 million in a single quarter. Together, the two periods produced a first-half deficit of about $178 million, or roughly 1.2 billion yuan, a figure that sits awkwardly next to the company’s growth metrics. Subscribers rose to 2.891 million in the quarter, and the average subscriber spent $92 a month, up from a year earlier.
Revenue per user has climbed as the company pushed higher-priced weight-loss treatments alongside its older lines in hair loss, mental health and sexual health. Yet the same mix is what is squeezing profits. Gross margin fell to 64% from 76% in the same period a year earlier, the clearest measure yet of what the weight-loss push costs.
The company began offering compounded semaglutide in 2024 at a fraction of the branded price, a move that turned it into one of the most visible names in the weight-loss boom and drove subscriber growth through the following year. Then the economics shifted. Regulators tightened the rules around compounded copies of the drugs, and Hims & Hers added branded options such as Novo Nordisk’s Wegovy to its lineup. The shift replaced some of its most profitable products with pricier ones and left the company buying inventory from the same manufacturers it once undercut.
Marketing costs tell a similar story. Hims & Hers has spent heavily on television, podcast and social advertising to win subscribers in a category now contested by two of the largest drugmakers in the world, plus a wave of digital rivals. The spend has worked: the company added subscribers in the quarter and kept them paying more each month. It has also consumed the margin gains those subscribers were supposed to bring.
The company’s model blends telemedicine and pharmacy in a way that looked unusually efficient when it launched. Doctors connected to the platform prescribe, patients order through an app, and a mail-order pharmacy ships the drugs. For a stretch the model generated profits on an adjusted basis, a record the company used to justify a bigger bet on weight loss. That bet now shows up as a 12-point slide in gross margin and two straight quarters of losses.
Analysts said the quarter shows a company in transition rather than decline. Revenue is still growing at nearly 40%, and the subscriber base keeps expanding. The question investors are asking, they said, is how many of these customers will stay once the promotional spending eases and how many will migrate to cheaper options. The weight-loss market has become one of the most competitive corners of health care, with Eli Lilly cutting prices on its own drugs and insurers pressing back on coverage. Retention, not acquisition, now decides the value of the franchise.
The company’s executives have framed the spending as deliberate: a bid to lock in category position while the market is still forming, with losses expected to narrow as the mix of branded and compounded drugs stabilizes. The second-quarter loss was smaller than the first, a sequence the company points to as evidence that the worst of the spending is past. Skeptics note that the narrowing amounted to just $5.8 million, a rounding error next to the bets the company has placed.
There are also structural questions that no marketing budget can answer. The compounded-drug channel that powered the company’s early weight-loss run has shrunk as regulators closed loopholes, and branded drugs carry thinner margins for a middleman. Telehealth rules vary by state, and the company’s prescribing model has drawn scrutiny before. Each of these forces lands on the same line of the income statement where the quarter went wrong: the one between sales and profit.
The comparison problem looms over the second half. Last year’s late quarters were built on the compounded boom that has since cooled, so Hims & Hers will be measuring its growth against easier numbers that flattered the mix. Even if revenue keeps climbing, the margin line may stay under pressure until the product mix settles. The company has said its balance sheet can absorb the losses while it invests, and its subscriber momentum gives it time. Time, in this market, is what the competition spends its own billions to buy.
The arithmetic is straightforward. Revenue grew 38%. Gross margin fell 12 percentage points. Subscribers climbed past 2.9 million while losses stacked to about $178 million in six months. For now, Wall Street is betting that the growth wins. The profit line will decide whether that bet holds.
