Hims’ profit prescription

Hims & Hers Health has treatments for everything from hair thinning to erectile dysfunction to weight loss. But the company has one problem it can’t seem to prescribe its way out of: shrinking profit margins.

The telehealth company reported disappointing third-quarter results yesterday, despite revenue jumping 49% to $890 million. Hims & Hers swung to a $33 million net loss from a $15.8 million profit a year earlier and cut its full-year profit outlook. It also forecast fourth-quarter revenue well below Wall Street’s expectations, sending shares plummeting 16.61%.

Here’s what’s weighing on the business:

• Soaring costs: The cost of revenue surged 143%, driven by pricier branded weight loss drugs, higher shipping expenses, and international expansion. Gross margins shrank from 74% to 57%.
• Slowing subscriber growth: Hims lost roughly 100,000 subscribers from the previous quarter after pulling back on US weight loss marketing and changes to its overseas brands.

Star treatment

Hims is betting that a little star power can help revive its slowing subscriber growth. The company announced that neuroscientist and wellness podcaster Andrew Huberman is joining its board, alongside a multimillion-dollar partnership that will see him advise the company and promote its offerings to his millions of listeners.

The move comes amid the internet’s growing obsession with self-optimization, from influencer Clavicular’s extreme looksmaxxing routines to tech entrepreneur Bryan Johnson’s multimillion-dollar quest to slow aging. While their approaches differ considerably from Huberman’s science-focused wellness advice, they’ve all attracted audiences eager to improve their bodies, creating a potentially lucrative opportunity for companies like Hims.

The peptide pipeline

Hims is also betting on another remedy: unapproved peptides.

The company is looking to cash in on the growing biohacking craze, with plans to offer treatments touted for everything from muscle recovery to anti-aging starting this month. The expansion could open up a new source of revenue, though the FDA has raised safety concerns about certain peptides—not to mention that many of their purported benefits remain unproven.

Between its growing treatment menu and its new celebrity partnership, Hims is positioning itself as a one-stop shop for the self-optimization zeitgeist. Now it just needs to maxx the one thing investors care about: profits.—SY