Hims & Hers Stock: Navigating Regulatory Headwinds and Leadership Shifts

The telehealth sector faces renewed scrutiny as Hims & Hers Health, Inc. released its quarterly earnings on November 3rd, presenting investors with a complex picture of robust revenue growth alongside concerning profitability metrics and regulatory challenges.

For the third quarter of 2025, the company demonstrated impressive top-line expansion, with revenue surging 49% to reach $599 million. This figure notably exceeded analyst projections of $580 million, highlighting continued strong demand for the company's services.

However, the bottom-line results told a different story. Earnings per share came in at just $0.06, significantly missing the $0.10 consensus estimate. Net profit showed a dramatic decline, falling to $15.8 million from $75.6 million in the same quarter last year. This drop is partially explained by a one-time tax benefit of $60.8 million that boosted the previous year's results, though underlying pressures are evident in the contraction of gross margins from 79% to 74%, indicating rising product costs.

On the subscriber front, the company added customers at a healthy pace, growing its user base by 21% to reach 2.47 million subscribers. Average revenue per user showed substantial improvement, climbing 19% to $80 per month.

Regulatory Storm Clouds Gather

A significant development emerged on September 9th when the U.S. Food and Drug Administration issued a warning letter to Hims & Hers concerning what the agency termed "false or misleading" advertising practices around weight loss supplements. The FDA specifically took issue with claims comparing these products to established medications like Ozempic and Wegovy, emphasizing that compounded alternatives lack formal approval and cannot be equated with clinically tested originals.

This regulatory action formed part of a broader government initiative targeting aggressive pharmaceutical marketing, with approximately 100 similar letters distributed to various companies. The timing presents particular challenges for Hims & Hers, as weight management solutions using GLP-1 alternatives had recently emerged as important growth drivers.

Executive Suite Reshuffle

Amid these challenges, the company announced significant leadership changes. Chief Operating Officer Nader Kabbani, who only assumed the role in May 2025, will transition to an advisory position. His responsibilities will be assumed by Mike Chi, previously Chief Commercial Officer and a company veteran since 2021.

Should investors sell immediately? Or is it worth buying Hims & Hers?

CEO Andrew Dudum expressed confidence in the appointment, describing Chi as "one of my most trusted partners" and "the right leader for our next chapter." Effective November 2nd, Chi will oversee operations, product development, marketing, and sales—a substantial portfolio during a period of increased uncertainty.

Wall Street's Divided Verdict

Market analysts remain deeply split on the company's prospects. Bank of America maintained its "Underperform" rating while modestly raising its price target from $28 to $32. In stark contrast, BTIG recommends buying the shares with a much more optimistic $85 price target. The divergence of opinion widened on November 8th when Wall Street Zen downgraded the stock to "Sell."

The central question troubling investors is whether Hims & Hers can sustain its growth trajectory without relying on the controversial compounded products that now face regulatory pressure.

Strategic Positioning and Future Outlook

Management provided full-year revenue guidance ranging between $2.335 billion and $2.355 billion, with fourth-quarter projections set between $605 million and $625 million. Adjusted EBITDA is expected to land between $307 million and $317 million.

Potentially significant developments are underway that could alter the company's strategic direction. Hims & Hers is reportedly in discussions with Novo Nordisk, manufacturer of Wegovy, about distributing authentic medications through its platform. Such a partnership would reduce dependence on compounded alternatives while leveraging the company's established distribution network.

International expansion continues with the July 2025 acquisition of UK-based ZAVA, providing entry into the British, German, Irish, and French markets.

After reaching highs of $73 per share, the stock has experienced considerable volatility. Investors now face the critical decision of whether current levels represent a buying opportunity or signal the beginning of a more sustained downturn amid regulatory pressures and executive transitions.