The Silver Lining of Last Week's Hims & Hers Earnings Miss

Universal income is coming. One company isn’t waiting. (From Mode Mobile)

When Hims & Hers Health (NYSE: HIMS) reported Q1 FY2026 earnings on May 11, shareholders were dismayed by the magnitude of the double miss.

The telehealth platform reported an earnings per share (EPS) of negative 44 cents versus analyst expectations of four cents, and quarterly revenue of just over $608 million fell far short of the nearly $617 million consensus.

While that revenue figure failed to inspire investors, it was EPS that equated to a bottom-line miss of more than 1,000% that caught the market off guard, causing the stock to sell off sharply. Since its Q1 earnings call, the stock has plunged nearly 23%.

But, for buy-and-hold investors, the long-term investment thesis remains intact.

The company is operating at the intersection of multiple high-growth markets that favor its international expansion efforts, it continues to demonstrate strong revenue growth, and its GLP-1 strategic partnership with Danish multinational pharmaceutical company Novo Nordisk (NYSE: NVO)—maker of semaglutide weight loss drugs Wegovy and Ozempic—should begin to bear fruit as soon as the second quarter.

Global Demand Bodes Well for International Expansion

Hims & Hers operates in five principal segments: Sexual Health, Hair Care, Dermatology, Mental Health, and Weight Loss.

All five of those businesses fall into telehealth, a global market that is forecast to undergo a compound annual growth rate (CAGR) of nearly 25% from 2025 to 2030, according to industry consultancy firm Grand View Research.

Yet each of its five principal segments is also poised for substantial growth.

During the same forecast period, Grand View Research projects:

• 10%+ CAGR for the global sexual health supplement market

• 10%+ CAGR for the global mental health screening market

• Nearly 11% CAGR for the global hair thinning market

• 14%+ CAGR for the global weight loss supplement market

• Nearly 18% CAGR for the global teledermatology market

 

Collectively, those global markets' forecasted growth should undergird the company’s international expansion efforts, which include the pending acquisition of Australian premier digital healthcare platform Eucalyptus—a company that has served more than 775,000 customers since its founding in 2019.

That deal, which Hims & Hers announced in February, is expected to close in the second half of 2026 and will broaden the company’s global footprint while supporting its long-term 2030 targets of at least $6.5 billion in revenue.

According to a Hims & Hers press release, “Eucalyptus currently has an annual revenue run-rate (ARR) north of $450 million…[and] deploys a rigorous capital allocation framework, delivering triple-digit year-over-year ARR growth in each quarter of calendar year 2025.

As part of the acquisition, Tim Doyle, co-founder and CEO of Eucalyptus, will become the SVP of International at Hims & Hers, overseeing the company’s international business.

GLP-1 Pivot and AI Investments Could Drive Growth in Q2

The company’s weight-loss drug pivot in Q1 has yet to materialize on the books, but that should change in Q2.

After Novo Nordisk dismissed its patent infringement lawsuit against Hims & Hers, the telehealth platform embraced a new strategy of selling branded GLP-1s through a partnership with Novo.

Since that agreement, Hims & Hers has fulfilled more than 125,000 Wegovy shipments and is on track to add more than 100,000 new weight-loss subscribers per month through year’s end. That was enough to motivate management to raise its full-year guidance to a revenue range of $2.8 to $3 billion, alongside $275 million to $350 million in earnings before interest, taxes, depreciation, and amortization (EBITDA).

Another catalyst is the company’s heavy investment in artificial intelligence (AI) and data infrastructure. Hims & Hers is building provider and consumer AI copilots, expanding its in-house AI team, and acquiring YourBio for at-home blood sampling, which together will strengthen a proprietary data flywheel that management says will create a durable competitive advantage.

Together, international expansion, AI investment, and proprietary data-bolstering should build on the top-line expansion the company is already experiencing. Over the past five years, Hims & Hers has seen average annual revenue growth of more than 74%, while quarterly revenue growth over the past five quarters has averaged nearly 53%.

A Growth Stock With a Lot of Growing to Do

Notably, Hims & Hers Health is dealing with some margin compression, and its international expansion efforts to acquire Eucalyptus could dilute shareholders in the future.

The company has borrowed $350 million via zero-coupon convertible senior notes from institutional investors that come due in 2032. While the zero-interest component looks appealing, if shares of HIMS reach $29.53 or higher by 2032, those notes can be converted into shares.

However, between the forecasted CAGR of its various business segments, management raising its full-year guidance, and ongoing top-line expansion, Hims & Hers Health could provide notable upside potential for investors looking to add a buy-low candidate to their portfolios.

After having lost around 64% over the past year, the stock has recently recovered from oversold territory when looking at their Relative Strength Index on the three- and six-month charts.

A consensus Hold rating doesn’t sufficiently inspire speculative investors; the stock’s average 12-month price target suggests nearly 31% upside, while the high-end estimate implies more than 104% potential upside.

Volatility is likely to continue as evidenced by the stock’s current beta of 2.43 and elevated short interest of 31.4% of the float.

But bearish sentiment is substantially lower than it was when the stock’s short interest was at its all-time high in Q3 2025, when $4.27 billion worth of shares were shorted versus $1.72 billion today.

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