To The Moon

$Hims & Hers Health Inc.(HIMS)$ is entering our coverage window with two stories running side by side.

On one side is a telehealth business still growing revenue at close to 40% a year. On the other are a federal lawsuit, a new shareholder class action and a quarter where profits fell far short of expectations. Wall Street has mostly landed on "Hold." Here is the fundamental picture worth having in mind before our Pretiming Report arrives.

Why HIMS Has Been Under Pressure

The turning point came on July 29, when the Federal Trade Commission, joined by Utah and Los Angeles County, sued the company. The complaint alleges that Hims & Hers shared sensitive health information with advertising platforms such as Meta and Snap despite its privacy promises. It also alleges that some customers were charged before speaking with a provider and that subscriptions were hard to cancel. The company denies wrongdoing and says the suit ignores evidence it provided during a nearly three-year investigation. The stock fell by double digits that day.

The pressure did not stop there. A securities class action followed in September, and law firms have been reminding investors of a November 2 lead-plaintiff deadline. On September 23, the shares dropped about 7% as investors weighed the legal overhang. HIMS closed at $29.30 on October 1.

Think of a runner wearing a weight vest. The legs, meaning growth, are strong, but every stride costs more than it used to.

Q2 Earnings: Growth Up, Profit Down

Revenue came in at roughly $753 million, up about 38% from a year earlier. The company now serves nearly 3 million subscribers and raised its full-year revenue outlook to $3.1–$3.3 billion. International revenue reached $131 million, including about $40 million from Eucalyptus.

The profit side tells a different story. Adjusted EBITDA (operating profit before certain costs) was about $60 million, an 8% margin versus roughly 15% a year earlier. Earnings per share was a loss of $0.37 against a Street expectation near a loss of $0.05, and free cash flow was negative about $68 million. For Q3, the company guided to $880–$900 million in revenue and $75–$95 million in adjusted EBITDA, which implies margins recovering toward 9–11%.

The Strategy Shift Behind the Numbers

In March, Hims & Hers struck a collaboration with $Novo-Nordisk A/S(NVO)$ . The company moved away from promoting compounded GLP-1 weight-loss drugs and toward FDA-approved Wegovy and Ozempic, with cash prices starting at $149 a month. Compounded versions remain only for limited cases a provider deems clinically necessary. This reduces one regulatory risk, but selling branded drugs helps explain why margins have been under pressure.

What Wall Street Thinks About HIMS

Of the 16 analysts tracked, 3 rate HIMS a Buy, 12 a Hold (neither a clear buy nor a clear sell) and 1 a Sell. The average price target is about $32.43, roughly 10% above recent trading levels. The spread among individual firms is wide:

• Needham: Buy, $42 (raised from $35)

• Bank of America: Neutral, $32 (raised from $30)

• JPMorgan: Neutral, $32 (resumed coverage September 11)

• Morgan Stanley: Equal Weight, $28 (raised from $21)

The optimistic camp points to GLP-1 momentum and international expansion. The cautious camp focuses on margins, subscriber retention and pricing.

Valuation: What the Price Is Asking You to Believe

Trailing earnings are negative, so a traditional price-to-earnings ratio says little right now. On sales, our rough math puts the market value near twice the midpoint of the company's own full-year revenue guidance. In plain terms, investors are paying for growth and betting that margins recover. Analysts expect Q3 earnings per share to swing to about $0.06, a sharp turn from the $0.37 loss, so the next report is a direct test of that bet.

The Macro Backdrop

The Federal Reserve raised rates by a quarter point on September 16, to 3.75%–4.00%, its first hike since 2023. Then Friday's jobs report showed payrolls up just 29,000 in September against roughly 84,000 expected, with unemployment rising to 4.2%. Markets now see an October hold as likely, at roughly 80% odds on CME FedWatch. The next checkpoints are September inflation data on October 14 and the Fed decision on October 28. For a subscription business paid for by consumers, higher rates and a cooling labor market matter at the margin. They can weigh on growth-stock valuations and on household spending.

What to Watch Before the Next Report

• Legal developments: If the FTC case or the class action brings new filings, settlement talks or changes to billing and data practices, look at whether the company discloses what it could cost.

• Q3 earnings: The company has not confirmed its report date, and third-party calendars estimate early November (November 2 or 9). If results land near guidance, the key questions are whether margins improve and whether free cash flow turns positive.

• Inflation data on October 14: A hot reading would revive rate-hike worries and a soft one would ease them. Either way, watch how HIMS reacts, since it has historically swung harder than the broader market.

Conclusion

HIMS is a growth story whose proof is still pending. The revenue is there, but profits and legal clarity are not yet.

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