Hims & Hers Health's (HIMS.N) shares fell nearly 7% in premarket trading on Tuesday, as concerns over shrinking profit margins overshadowed strong subscriber growth and a raised annual revenue forecast.
Wall Street analysts warned that the aggressive push for growth could be hurting profitability.
Morningstar analyst Keonhee Kim said the subscriber growth was impressive but not enough to overlook the continued margin decline after gross margins fell for the fourth straight quarter.
While the company lifted its 2026 revenue forecast, it trimmed the top end of its adjusted core earnings outlook.
"The HIMS ramping story should continue, particularly given the inevitable peptide entry. But we still see a tough balance between spending to grow and growth, keeping our optimism limited," Leerink Partners analyst Michael Cherny said.
Chief financial officer Oluyemi Okupe acknowledged the trade-off on an analyst call, saying "As branded weight loss products and international revenue become a larger portion of the business, we expect gross margins will remain below the levels we have historically achieved."
Analysts expect the increasing costs to pressure the stock. Hims shares have lost roughly 2% so far this year.
Still, Barclays analyst Glen Santangelo said margins could improve in the second half of the year, despite what he called "not the better margin quarter."
The company is targeting at least $6.5 billion in revenue and $1.3 billion in adjusted EBITDA by 2030.
