Record Revenue and Profitability Offset by Market Skepticism

Hims & Hers Health (NYSE: HIMS), the direct-to-consumer digital health platform, kicked off 2025 with exceptional financial results—posting triple-digit growth in revenue and net income—yet the market reaction was lukewarm, with the stock declining by approximately 4% following the earnings release. This divergence between fundamentals and sentiment highlights a growing tension: strong operational execution versus concerns about sustainability and margin pressure.

Financial Highlights: All Key Metrics Pointing Upward

In Q1 2025, the company generated $586 million in revenue, more than doubling year-over-year (+111%). Net income surged 345% to $49 million, while adjusted EBITDA jumped 182% to $91 million. Operating cash flow came in at $109 million, and free cash flow totaled $50 million—up 321% from the prior year. Hims & Hers ended the quarter with $323 million in cash and no debt on its balance sheet.

Growth Drivers: Personalized Care, Weight Loss, Dermatology, and Sexual Health

The company’s subscriber base reached an all-time high of 2.4 million, up 38% YoY, with monthly revenue per average subscriber rising 53% to $84. Weight loss remained a key driver, boosted by the introduction of new GLP-1 offerings such as liraglutide and a strategic partnership with Novo Nordisk to offer Wegovy® as part of a bundled care package.

Dermatology also saw strong adoption of personalized treatments, with over 80% of subscribers in that category now using tailored solutions. Meanwhile, men’s and women’s hair loss categories grew by over 45% and 170%, respectively. The shift within the sexual health category—from on-demand products to daily, precision-based solutions—continued, though it caused a temporary slowdown in new customer acquisition.

Margin Pressure and Execution Risks: A More Nuanced Picture

Despite the top-line momentum, gross margin declined by 900 basis points to 73%—a consequence of product mix shifts, aggressive marketing, and the expansion of GLP-1 therapies. While adjusted EBITDA margin improved to 16%, investors appear concerned about the durability of this growth given the resource-intensive go-to-market strategy.

The company also noted that the FDA’s resolution of the semaglutide shortage may limit its ability to offer compounded alternatives going forward, introducing regulatory uncertainty around one of its fastest-growing verticals.

Updated Outlook for 2025 and Beyond

Management raised full-year 2025 revenue guidance to $2.3–$2.4 billion and updated adjusted EBITDA guidance to $295–$335 million—implying EBITDA margin expansion and improved operating leverage. Long-term targets remain ambitious, with the company aiming for $6.5 billion in revenue and $1.3 billion in adjusted EBITDA by 2030.

Near-term initiatives include the rollout of expanded diagnostic capabilities following the acquisition of an at-home lab testing provider, and entry into new categories such as low testosterone and menopause support—targeting a combined U.S. population of over 50 million underserved individuals.

Conclusion: A Growth Story Facing Higher Expectations

Hims & Hers has proven its ability to scale quickly while deepening engagement through personalized, subscription-based care. However, the 4% decline in share price post-earnings suggests that the market is not just rewarding growth, but scrutinizing its composition and cost.

For long-term investors, the company offers a compelling platform play in digital health with expanding margins and a differentiated consumer experience. Yet the road ahead will require careful navigation of regulatory dynamics, margin preservation, and continued subscriber growth to justify its current and future valuation.