What Are Hims & Hers Health Stock Investors Overlooking?

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Hims & Hers Health (HIMS) increased its fiscal Q2 2026 revenue by 38.2%, and management raised its full-year revenue outlook. The number holders may be overlooking is gross margin, the share of each sales dollar left after the cost of what the company sells. That metric fell to 63.8% in the quarter from 76.4% a year earlier. The slide matters at a company that already reported an operating loss in the quarter. So why is Hims & Hers keeping less of each sale?

Management Expects Gross Margin To Stay Lower

Management provided the reason on its August 10, 2026 call, noting it expects gross margin to stay below past levels as branded weight loss products and international revenue become a larger part of the business. Both are growing fast. International revenue rose more than 17-fold from a year earlier to $131 million in fiscal Q2 2026, and about $40 million of that total came from Eucalyptus, the business Hims & Hers bought in June. Management also said a large part of the quarter’s beat came from the weight loss category and other areas, which were much stronger than it expected. Based on management’s account, the lower margin accompanies the sales Hims & Hers is growing fastest, and the old level is not expected back.

Hims & Hers’ Gross Margin Fell Two Years Running

Hims & Hers’ gross margin stood at 82.2% over the twelve months to June 2024, before falling to 76.2% over the twelve months to June 2025. The metric then dropped again to 68.4% over the twelve months to June 2026. On the $2.58 billion of revenue reported in that latest period, each point of gross margin is worth about $26 million of gross profit a year.

Over the latest year, the rest of the income statement has moved in the same direction. Hims & Hers reported an operating loss of $155 million over the twelve months to June 2026, compared with an operating profit of $126 million a year earlier. The stock fell 43.1% over the past year, while the S&P 500 returned 15.3%. Shares now trade at 2.5 times sales, against 3.2 times for the S&P 500.

Management Is Guiding To Faster Growth

Management expects fiscal Q3 2026 revenue of $880 million to $900 million, up about 47% to 50% from a year earlier. That would represent faster growth than in fiscal Q2. The company also expects an adjusted EBITDA margin of 10% at the midpoint. That margin is management’s own adjusted measure, which leaves out several costs counted in the reported results. One cost line is already shrinking against sales. Operations and support costs improved by three points as a share of sales from fiscal Q1 to fiscal Q2, which management credited to pharmacy efficiencies and early savings from AI in customer support.

Cash has held up over the longer stretch, too. Hims & Hers produced $263 million of cash from operations over the twelve months to June 2026, and management expects free cash flow to resume in the second half of 2026 after a negative fiscal Q2.

A holder has reason for measured concern rather than alarm. Gross margin has fallen for two years and management expects it to stay below past levels, but sales are growing fast and the business produced cash over the past twelve months. A further fall in gross margin from fiscal Q2’s 63.8% would give holders more reason for concern. Hims & Hers is expected to report its fiscal Q3 2026 results in November 2026, and the gross margin in that report is the number to watch.

Is Too Much Of Your Wealth Riding On One Stock?

One number was enough to change how Hims & Hers Health looks to its holders. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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