Hims & Hers Expands into Low Testosterone and Menopause Care Amid High Valuation and Margin Pressures

What happened

Hims & Hers has announced an expansion into low testosterone and menopause care, with plans for longevity services and global growth by 2026, signaling a continued push to broaden its digital health platform. This move aligns with the company's aggressive product expansion strategy, which has driven revenue from $526.9 million in 2022 to $1.48 billion in 2024, though gross margins have compressed to 74% in Q3 2025. However, the expansion requires substantial marketing investment, which already consumes 39% of revenue, and faces regulatory risks in sensitive health areas. The master report cautions that Hims & Hers trades at a premium valuation—59x P/E and 45% above DCF base-case—amid industry commoditization and competitive pressures. Investors should scrutinize whether this growth can be achieved without further margin erosion or increased leverage from its $1 billion convertible notes.

Implication

The move into low testosterone and menopause care may tap into underserved markets, potentially boosting subscriber counts and recurring revenue. However, it likely necessitates higher marketing spend, which has been a drag on profitability and could worsen if acquisition costs rise. Regulatory scrutiny around hormone therapies and telehealth prescribing adds uncertainty, possibly leading to compliance issues or slowed growth. If successful, the expansion might justify premium multiples, but failure could trigger thesis invalidation through margin compression or dilution. Overall, this reinforces the need for cautious monitoring rather than immediate investment, as the risks outweigh near-term benefits.

Thesis delta

The expansion into new care areas does not materially shift the 'wait' thesis, as it introduces additional execution and regulatory risks without addressing core concerns like high valuation and margin pressure. Investors should remain on hold until evidence emerges that these ventures can scale profitably and sustainably, without exacerbating existing weaknesses.