Hims & Hers Touts Subscriber Growth Amid Persistent Regulatory Headwinds

What happened

Hims & Hers reported Q4 and full-year 2025 results, boasting over 2.5 million subscribers and framing itself as a future global leader in health and wellness. However, this subscriber milestone masks deeper structural risks, as the DeepValue report highlights FDA tightening on compounded GLP-1 products, which have driven recent revenue but are now constrained by supply and promotion restrictions. The press release avoids mentioning recent product pullbacks, like the halted compounded semaglutide pill after FDA warnings, signaling ongoing regulatory vulnerability. Financially, revenue growth is overshadowed by gross margin compression from 79% to 74%, tied to GLP-1 mix shifts and fulfillment costs that undermine profitability. Management's pivot to international acquisitions like Eucalyptus aims to diversify, but near-term proof of offsetting U.S. GLP-1 declines is lacking, keeping the investment case uncertain.

Implication

Firstly, reaching 2.5 million subscribers supports top-line momentum but may not sustain earnings if GLP-1 revenue, a high-ARPU segment, contracts under FDA enforcement. Secondly, the omission of regulatory risks in the press release suggests management is downplaying immediate threats, such as potential API restrictions or warning letters that could disrupt supply and marketing. Thirdly, margin compression from 79% to 74% indicates cost pressures from newer offerings and fulfillment, which could worsen if GLP-1 mix normalizes rapidly. Fourthly, international expansion via Eucalyptus offers long-term diversification but lacks near-term revenue visibility to counter U.S. headwinds within the next 6-12 months. Finally, investors should remain on hold until Q1 2026 disclosures reveal whether GLP-1 revenue declines are gradual and non-GLP categories hold monetization, as per the DeepValue scenarios.

Thesis delta

The article confirms subscriber growth aligns with prior trends but introduces no new data to alter the investment thesis. It reinforces management's narrative of global expansion without addressing the critical regulatory risks flagged in the DeepValue report. Therefore, the thesis remains unchanged: a 'WAIT' rating persists until evidence emerges of GLP-1 revenue stability and international scale mitigating U.S. pressures.