Key Takeaways
- The FTC added Arizona, Florida, Nebraska, Ohio and Wisconsin to its lawsuit against Hims & Hers on Tuesday. That was the same day the stock fell 17% on its third-quarter report.
- The FTC’s billing claims say Hims charges before a provider visit and makes canceling hard. Both claims are about the subscriptions that bring in its revenue.
- Hims lost 103,000 subscribers in the third quarter and gave fourth-quarter revenue guidance below what analysts expected.
- A settlement that changes how Hims signs up and bills subscribers could hurt the subscriber recovery that analysts’ 2027 estimates rely on. A Jan. 7 hearing on Hims’ motion to dismiss comes first.
Hims & Hers Health (HIMS) just picked up five more opponents in court.
On Tuesday, the Federal Trade Commission said Arizona, Florida, Nebraska, Ohio and Wisconsin have joined its lawsuit against the telehealth company. On the same day, the stock fell 17% after a third-quarter report that showed its subscriber count shrinking.
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Five more states, and a billing case
The FTC first sued in July, with Utah and Los Angeles County. It alleges that Hims shared customers’ sensitive health information with advertising platforms, including Meta and Snap, while saying it protected their privacy. It also alleges that Hims misled users about billing and cancellation. On billing, the FTC says Hims charges users for prescription drugs before they meet with a provider and makes subscriptions difficult to cancel.
The amended complaint adds claims under each new state’s consumer protection laws. Those come on top of the FTC Act and the Restore Online Shoppers’ Confidence Act, the federal law on online subscription billing. According to Hims’ quarterly filing, the FTC asked for an injunction, money and civil penalties when it filed in July.
Hims isn’t budging. “We will vigorously defend ourselves against these follow-on claims, which rely on the same flawed allegations advanced in the government’s lawsuit,” a company spokesperson said Tuesday. Hims has also asked the court to dismiss the FTC’s case, and that motion has a hearing set for Jan. 7.
Subscribers are already shrinking
The billing claims target the core of Hims’ recurring revenue: when a new subscriber first pays, and how easily they can stop.
And the FTC picked an awkward time. Hims lost 103,000 subscribers from June to September as it held back on US weight-loss marketing. Over the same quarter, monthly revenue per average subscriber rose 30% to $105. CEO Andrew Dudum called the subscriber hit a trade-off “we will make every time,” and CFO Yemi Okupe warned of “an additional quarter of subscriber count headwinds.”
Analysts still expect plenty of growth. Consensus revenue rises from $3.14 billion this year to $3.86 billion in 2027 and $4.35 billion in 2028:
That works out to about 23% growth in 2027. A court filing alone doesn’t make me expect those numbers to come down. A forced change to how Hims signs people up could.
The near term already looks flatter. Third-quarter revenue was $890.4 million, up 49% from a year earlier and Hims’ biggest quarter on this chart:
But fourth-quarter guidance of $875 million to $895 million leaves revenue roughly flat with the third quarter at best. It’s also below the $955.1 million analysts had expected.
A settlement could still cost subscribers
My read: this case is more likely to end in a settlement and a new sign-up and cancellation process than in a ruling that guts the business. That’s how FTC billing fights often end. For Hims, though, a new process is exactly what could hurt. Suppose it has to wait until after a provider visit to charge, and has to make canceling easy. I suspect fewer people would get from the intake form to a paid plan, and more would leave sooner. That would land just as Hims is counting on subscribers coming back after one more soft quarter.
Then there’s the money. Hims had set aside $62.5 million for legal contingencies as of June 30. Its latest quarterly filing also shows a shareholder class action, filed Sept. 1, that rests on the same privacy and billing allegations.
Bottom line: the wider suit adds a real but slow-moving risk to the one number Hims most needs to turn around, its subscribers. Before relying on analysts’ 2027 estimates, I’d want to see how the Jan. 7 hearing goes and whether fourth-quarter results, due in early 2027, show subscribers growing again.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
