Two days ago, Grey Pepper previewed the Hims earnings report with one question: what do branded weight-loss drugs actually earn a telehealth company?
The third-quarter results, published November 9, 2026, show how complicated that question has become.
Hims & Hers Health grew revenue 49% to $890.4 million, its second consecutive quarter of accelerating growth. In the same quarter, its gross margin fell to 57% from 74% a year earlier, and the company swung to a net loss of $33.0 million from a $15.8 million profit.
Those figures capture the tension in a business that is expanding rapidly while the cost of delivering its products is growing even faster.
Hims has shifted its United States weight-loss strategy toward branded GLP-1 medicines and limited the scale of its compounded alternatives. But the margin decline is not solely a story about branded drugs. The company’s regulatory filing also points to more frequent deliveries, higher fulfillment expenses, international expansion and acquisitions.
And one important distinction: the new Eli Lilly partnership was announced November 6, after the quarter ended. Its economics are not yet visible in the September results.
The third quarter is therefore less a final verdict on branded GLP-1 distribution than an unusually clear look at what it costs Hims to become a larger, more complicated healthcare platform.
What the Hims Earnings Release Actually Shows
The headline figures are strong on revenue and customer volume.
Hims reported third-quarter revenue of $890.4 million, compared with $599.0 million in the same period of 2025. That is an increase of $291.4 million, or 49%.
Subscribers reached approximately 2.79 million, up 13% from 2.47 million a year earlier.
Monthly revenue per average subscriber climbed 30%, from $81 to $105. The increase reflected changes in product mix, including weight-loss offerings, and the contribution of the Eucalyptus acquisition. The metric also includes revenue from one-time purchasers who are not counted as subscribers, so it should not be interpreted as the amount a typical subscriber personally paid each month.
Adjusted EBITDA, the company’s preferred non-GAAP profitability measure, increased modestly to $82.4 million from $78.4 million. Its adjusted EBITDA margin was approximately 9%.
The GAAP profit figures tell a different story.
Hims recorded a net loss of $33.0 million, compared with net income of $15.8 million a year earlier. Its gross margin declined from 74% to 57%, a reduction of 17 percentage points.
Revenue increased 49%, but gross profit increased only 15%, from $442.1 million to $509.2 million.
Cost of revenue was the more revealing figure. It rose from $156.9 million to $381.2 million, an increase of 143%.
That means the direct costs associated with delivering products and services grew almost three times as fast as revenue in percentage terms.
Revenue up 49%. Cost of revenue up 143%. Those two numbers explain why the headline growth did not translate into comparable profit growth.
Free cash flow also deteriorated, falling to $26.0 million from $79.4 million a year earlier. Net cash provided by operating activities dropped to $65.4 million from $148.7 million.
Chief executive Andrew Dudum framed the company’s ambition around owning the customer relationship. In the earnings release, he argued that healthcare consumers increasingly want choice, value and continuing relationships with their care teams.
The financial statements show how much that strategy now costs to operate.
The Branded GLP-1 Pivot Has a Price, but It Is Not the Only One
The strategic shift began before this quarter.
In March 2026, Hims announced changes to its United States weight-loss offering, moving toward broader access to branded GLP-1 medicines while providing compounded GLP-1 products through its platform on what the company describes as a limited scale.
The change marked a departure from the model that helped establish Hims as a major consumer-facing weight-loss business.
During the earlier compounding period, Hims could offer lower-priced alternatives through its pharmacy network. The end of the GLP-1 shortage environment, combined with greater regulatory scrutiny and manufacturer competition, reduced the room for that approach.
Branded medicines change the commercial relationship. A manufacturer controls the medicine and much of its pricing, while the telehealth platform competes through clinical access, convenience, customer acquisition and continued service.
That can still be a substantial business. It is not necessarily a business with the same margins as the earlier model.
But the Form 10-Q does not attribute the 17-percentage-point gross margin decline to branded medicines alone.
Hims specifically identifies shorter shipping cadences and higher fulfillment costs associated with its weight-loss offerings, growth in international business and new offerings, and the effects of acquisitions.
More frequent deliveries matter because each shipment carries packaging, handling and distribution costs. Customers may prefer smaller, more frequent shipments, but that convenience changes the economics of every order.
The quarterly filing says product and packaging costs increased 176% year over year, while shipping costs rose 64% and costs associated with medical consultation services rose 32%.
The company also incurred restructuring expenses connected with the weight-loss transition.
Through the first nine months of 2026, those charges totaled $41.9 million. Of that amount, $28.5 million was recorded in cost of revenue, primarily through inventory write-downs, while $13.4 million was recorded in operating expenses.
The third quarter itself contained $3.8 million of these charges, all within operating expenses. None of the nine-month inventory write-down amount was recorded in third-quarter cost of revenue.
That distinction matters. The quarter’s 57% gross margin cannot simply be dismissed as the temporary result of a restructuring charge. The underlying cost structure has changed.
What the filings still do not disclose is the precise revenue contribution or profit margin of branded GLP-1 prescriptions compared with compounded treatments.
Without that breakdown, investors cannot reliably calculate how much of the company’s margin compression belongs to the branded-drug transition and how much comes from the broader business.
International Growth Is Now a Major Part of the Story
The geographical numbers reveal another important change.
United States revenue increased 21% in the third quarter to $657.1 million. Through the first nine months of 2026, domestic revenue increased 9%.
Outside the United States, growth was far faster.
Rest-of-world revenue increased 321% to $233.3 million, compared with $55.5 million a year earlier. For the first nine months, international revenue reached $442.9 million, up 530%.
International operations therefore generated approximately 26% of third-quarter revenue.
But this was not purely organic expansion. Hims says the increase was primarily driven by geographic expansion through recent acquisitions, particularly Eucalyptus.
Hims acquired the Australia-based digital health platform in June 2026, adding operations spanning Australia, the United Kingdom, Germany, Ireland, Canada and Japan.
The acquisition’s accounting purchase price was approximately $968.5 million. That comprised $225.0 million paid upfront, $683.9 million of deferred payments and contingent consideration valued at $59.6 million at the acquisition date.
The company also disclosed a possible additional earn-out of up to $96.6 million, depending on specified conditions.
Hims has other acquisition-related commitments, including potential earn-outs connected with Zava and Medici.
Those transactions have helped accelerate reported growth. They also add financial obligations, integration work and operating complexity.
International revenue now represents about a quarter of Hims’ business. Much of the expansion was acquired rather than built from scratch.
That does not make the growth unimportant. Acquisitions can provide access to customers, healthcare infrastructure and new markets that would otherwise take years to establish.
But the financial test is whether those operations become more profitable after integration, not merely whether they increase reported revenue.
The Balance Sheet Is Doing More Work
Hims ended September with approximately $605.6 million in cash and cash equivalents and $106.6 million in short-term investments.
That provides liquidity for a company still investing heavily in international expansion, technology and clinical offerings.
But the obligations are substantial.
The Form 10-Q reports a working capital deficit of $114.8 million at September 30, compared with a surplus of $363.2 million at the end of 2025. The company attributes the deterioration primarily to deferred consideration from the Eucalyptus acquisition.
Free cash flow remains positive, but at $26.0 million for the third quarter it was substantially below the year-earlier figure.
Free cash flow and net income measure different things. The reported net loss does not mean the company consumed exactly $33 million in cash during the period.
Nevertheless, the direction is consistent: Hims is generating more revenue while retaining less of it as gross profit and producing less quarterly free cash flow than a year earlier.
For investors, the important question is whether the company can improve the economics of fulfillment and integrate acquisitions without sacrificing the subscriber growth supporting its valuation.
The Lilly Partnership Is a Fourth-Quarter Test
The most interesting development happened after the third quarter ended.
On November 6, Eli Lilly and Hims announced an agreement allowing eligible patients to access Zepbound and the Foundayo pill through the Hims platform at self-pay prices matching Lilly’s direct offering.
Starting prices were announced at $299 per month for Zepbound and $149 per month for Foundayo.
The arrangement removes the need for eligible Hims customers to leave the platform to complete the Lilly purchasing process.
It also brings Lilly alongside Novo Nordisk as a major branded obesity-drug partner for Hims.
As Grey Pepper reported in its coverage of the Lilly agreement, the commercial arrangement represents a meaningful reversal from the period when compounded GLP-1 products were central to the platform’s weight-loss offering.
The November agreement cannot explain the third-quarter earnings. Its announcement came more than five weeks after September 30.
Instead, it creates the next test: whether Hims can increase prescription volume and customer retention while earning an attractive return on branded medicines whose underlying prices are controlled by the manufacturers.
The earnings filings do not provide a separate contribution margin for the Lilly or Novo arrangements.
That leaves investors watching indirect indicators, including overall gross margin, fulfillment costs, subscriber trends and revenue per average subscriber.
Those indicators are useful. They are not equivalent to a disclosed branded-drug profit-and-loss statement.
What to Watch After These Hims Earnings
Management tightened its full-year 2026 revenue guidance to $3.13 billion to $3.15 billion while reducing its adjusted EBITDA outlook to $257 million to $277 million.
For the fourth quarter, Hims expects revenue between $875 million and $895 million, roughly flat with the third quarter, and adjusted EBITDA between $70 million and $90 million.
That forecast is striking given the headline growth rate. A business expanding 49% year over year is guiding to limited sequential revenue growth over the final three months of 2026.
The next reports will have to answer three questions.
First, does gross margin stabilize as the company adjusts to shorter shipment cycles, a different medication mix and the costs of operating in additional countries?
Second, does international expansion translate into sustained profitability once acquisition integration and deferred payment commitments are considered?
Third, does Hims begin providing enough detail about its weight-loss business to show whether branded GLP-1 distribution is economically attractive on its own?
Those questions matter more than treating each new pharmaceutical partnership as evidence of a profitable business model.
For years, much of the debate around Hims concerned compounded obesity drugs: whether they could be sold, how long the opportunity would last and whether regulators would restrict the business.
That debate has evolved. Hims now has direct commercial relationships with the industry’s biggest obesity-drug manufacturers, a much larger international operation and an expanding range of healthcare offerings.
The opportunity is larger, but so are the costs.
The third-quarter results show that Hims can grow revenue rapidly while expanding its distribution and healthcare infrastructure. They do not yet show that the new operating model can restore the margins investors once associated with the company.
That is the central tension of this earnings report.
For Hims, revenue growth is no longer the hardest question. The question is how much of that growth the company can afford to keep.
Sources and Further Reading
- Hims & Hers Health, Inc. Reports Third Quarter 2026 Financial Results. SEC Form 8-K, Exhibit 99.1, November 9, 2026.
- Hims & Hers Health, Inc. Quarterly Report for the Period Ended September 30, 2026. SEC Form 10-Q, November 2026.
- Eli Lilly and Company. Lilly and Hims & Hers Expand Access to FDA-Approved Lilly Medicines, November 6, 2026.
- Grey Pepper. Hims Reports Monday With Both GLP-1 Giants on Its Shelf. Earnings Preview, November 2026.
- Grey Pepper. Hims & Hers and Lilly: The Zepbound Platform Agreement, November 2026.
