Key Takeaways
- Hims & Hers grew Q2 2026 revenue 40% year over year to $753 million, but gross margin fell to 64%, the sixth straight quarterly decline and the steepest single-quarter drop in that stretch, while operating and net margins both turned negative for the first time in over two years.
- Management’s headline $60 million adjusted EBITDA figure excludes roughly $81 million in one-time costs, a large share of which the CFO attributed directly to the Eucalyptus acquisition and legal accruals tied to the FTC lawsuit. On an unadjusted basis, Q2 EBITDA was actually negative $70 million.
- The FTC’s July 29 complaint, a related securities fraud class action, and a board fiduciary-duty investigation all target the same subscription and data practices management credits for its marketing efficiency gains, raising the question of whether that efficiency is durable.
- None of this yet reflects in the numbers, since the suit was filed five weeks after Q2 closed. Q3 results, still unreported, are the first that could show whether the promised margin recovery is real or whether legal pressure is starting to bite.
The Margin Story Management Tells, and the One the Numbers Show
Hims & Hers (HIMS) posted $753 million in revenue for the second quarter of 2026, up 40% from a year earlier and above the roughly $700 million Wall Street expected. Chief Financial Officer Yemi Okupe framed the quarter as proof the company can grow fast and tighten its finances at the same time, pointing to an 8% adjusted EBITDA margin, a 1-point improvement from the first quarter.
The unadjusted numbers tell a different story because gross margin fell to 64% in Q2, down from 70% in Q1 and 79% six quarters earlier, the sixth straight quarterly decline and by far the steepest, more than double the pace of the prior few quarters. Operating margin swung negative for the first time in this data in Q1, at negative 8%, then fell further to negative 13% in Q2. Net margin followed the same path, from positive in every quarter since at least September 2024 to negative 15% in Q1 and negative 12% in Q2.
GAAP EBITDA, not the adjusted figure Hims highlights, was negative $70 million in Q2, a swing of roughly $130 million from the $60 million in adjusted EBITDA management reported for the same period. Okupe explained the gap himself on the Q2 earnings call: Q2 excluded about $81 million in one-time costs, made up of “acquisition and transaction costs primarily related to the closing of our Eucalyptus acquisition, restructuring costs… and legal contingency accruals related to recent litigation with the FTC.”
Those are his words, not an outside estimate. The improvement investors are being pointed toward depends on excluding the cost of the acquisition fueling Hims’s international growth and the legal bill tied to how it collects and uses customer data. Strip that adjustment out, and Hims just posted its worst operating quarter and its worst net loss margin in over two years, in the same period management called an inflection point.
The Lawsuit Behind the Number
The FTC complaint filed July 29 is not the run-of-the-mill regulatory dispute the earnings call made it sound like. The FTC, joined by Utah and California, alleges Hims charged consumers for prescriptions immediately after they filled out an intake form, before a provider had actually made a treatment decision, and that the company made cancellation deliberately difficult by hiding the cancel button behind extra steps. Separately, it says Hims shared health-related customer data with Meta and Snap for ad targeting despite telling users their information was protected.
Those three practices sit close to the center of the growth mechanics Hims described on the same call. Okupe credited a 5-point year-over-year improvement in marketing efficiency to stronger retention, cross-sell, and years of brand investment, and CEO Andrew Dudum spent much of the call describing an AI-driven data flywheel where every subscriber interaction sharpens targeting and lowers the cost of finding the next one. If regulators force easier cancellation or restrict how customer data can be shared with ad platforms, some of the efficiency gains management is counting on to fund lower prices become harder to repeat.
The fallout has already spread beyond the regulatory case itself. A securities fraud class action tied to the FTC disclosure carries a November 2, 2026 lead-plaintiff deadline, and the law firm Berger Montague has separately opened an inquiry into whether Hims’s board breached its fiduciary duties in connection with the same data and billing practices. None of this proves the underlying allegations, and Hims has said it will defend itself vigorously, but it adds legal and reputational cost on top of a margin trend that was already worsening before the suit was filed.
What Would Actually Change the Picture
The one thing missing from this analysis is timing. Hims’s fiscal second quarter ended June 30, a full month before the FTC filed its complaint on July 29, so nothing in the numbers above reflects any change in consumer behavior, marketing spend, or subscription practices tied to the lawsuit itself. The margin deterioration through Q2 is entirely a function of the branded weight-loss and international mix shift management has described for two quarters running, not the legal fight.
Total operating expenses as a share of revenue climbed to their two highest points in the eight quarters shown, 71% in Q1 and 69% in Q2, versus a range of 58% to 69% in the six quarters before that. That expense line bundles marketing with general and administrative costs, including the FTC accrual itself, so it can’t cleanly isolate whether marketing spend specifically got less efficient, but it does show that the operating leverage Okupe described on the call, three points of sequential leverage in operations and support, hasn’t yet shown up in the total cost structure.
Hims guided to a 10% adjusted EBITDA margin at the midpoint for Q3 and roughly 12% for Q4, which would require the steepest sequential improvement in the margin line all year. Q3 results, not yet reported, are the first that could show whether that recovery is real or whether the FTC case starts pressuring the subscription and marketing mechanics the growth plan depends on. Until then, the honest read is that Hims is running two experiments at once: an aggressive bet that AI and scale can fund cheaper prices and faster growth, and a live legal fight over the exact customer acquisition and retention tools it’s using to do it. The company’s own numbers, not the framing on the call, say the first bet hasn’t paid off yet. Whether the second one changes that calculus is a Q3 and Q4 question, not a Q2 one.
Should You Invest in Hims & Hers Health, Inc.?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up HIMS stock and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
You can build a free watchlist to track HIMS alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.
Access Professional Tools to Analyze HIMS stock on TIKR for Free →
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
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 stocks mentioned. Thank you for reading, and happy investing!
