Hims & Hers: Navigating Growth Pains as Novo Nordisk Partnership Talks Resurface

The telehealth provider Hims & Hers finds itself at a critical juncture, presenting a complex financial picture where robust revenue expansion clashes with severe profitability pressures. While the market’s response to recent earnings has been measured, a potentially transformative development is unfolding behind the scenes that could significantly alter the company’s trajectory.

Profitability Squeeze Amidst Aggressive Expansion

The company’s latest operational metrics reveal a tale of two realities. On one hand, revenue surged an impressive 49% to reach $598.9 million, demonstrating strong market demand for its services. However, this top-line growth came at a substantial cost to profitability. Earnings per share witnessed a dramatic 81% collapse, while the gross margin contracted by more than 5 percentage points. The operating margin now stands at a thin 1.9%, highlighting the intense pressure on the bottom line.

This profitability challenge stems largely from a substantial 45.6% increase in operating expenditures. Strategic investments in technology infrastructure, which ballooned by 92.4%, combined with an 80.8% rise in administrative costs, have created what analysts term a classic growth trap. Chief Financial Officer Yemi Okupe defended these allocations, emphasizing their expected long-term cash flow benefits, particularly in establishing the company’s GLP-1 production supply chain.

Cautious Guidance Reflects Mounting Headwinds

Management’s outlook for the final quarter underscores the growing operational challenges. The company projects revenue between $605 million and $625 million, which would represent a deceleration to 26-30% growth. Furthermore, the full-year forecast saw a slight downward revision to a range of $2.335 billion to $2.355 billion, signaling increased caution about near-term prospects.

This tempered guidance partially results from $20-25 million in charges associated with the transition to sterile weight management products. The company noted that shorter shipping intervals and reduced revenue recognition per shipment are creating additional operational complexities.

Should investors sell immediately? Or is it worth buying Hims & Hers?

The Novo Nordisk Wild Card

Perhaps the most significant development emerged from the quarterly report: the revelation of active discussions with Danish pharmaceutical giant Novo Nordisk. This represents a potential reversal of fortune after the partnership abruptly dissolved in June 2025 due to disagreements over GLP-1 alternatives.

Chief Executive Officer Andrew Dudum expressed optimism about the renewed dialogue, stating, “We are pleased to be renegotiating with Novo regarding the hopefully soon-to-be FDA-approved pill along with commercial dosages.” Market expert Michael Cherny of Leerink Partners suggested this development could signal “an enhanced earnings outlook” for Hims & Hers’ weight management business, which is projected to generate $725 million in revenue by 2026. The company cautioned investors, however, that no definitive agreement has been reached, leaving the outcome of these negotiations uncertain.

Long-Term Ambition Versus Short-Term Reality

Despite current margin compression, CEO Dudum remains committed to an ambitious $6.5 billion revenue target by 2030. The company is banking on expansion into new therapeutic areas, including testosterone treatments and menopause care, coupled with international growth following July’s acquisition of ZAVA, to fuel its next growth phase.

The central question facing investors is whether a potential reinstatement of the Novo Nordisk partnership can outweigh current margin concerns and reinvigorate the stock. Alternatively, will Hims & Hers remain caught between the competing demands of growth investment and profitability pressure? The answer will determine whether the company achieves a remarkable turnaround or continues to struggle with its growth paradox.