Q3 2026 earnings call, November 9, 2026: revenue growth accelerates to 49%, but management is deliberately pulling marketing and lowering 2026 profit expectations

Hims & Hers reported third quarter revenue of $890 million, up 49% year-over-year and the second consecutive quarter of accelerating growth. The quality of that growth is more mixed than the headline suggests. Subscribers fell by 100,000 sequentially to 2.8 million, gross margin dropped roughly 7 points to 57%, and management lowered its full-year adjusted EBITDA guidance to $257 million to $277 million. The company framed all three as deliberate choices. Investors will have to decide how much of that framing to accept.

A Deliberate Marketing Pullback in U.S. Weight Loss, With Another Quarter of Subscriber Pressure Guided

The central message of the call was that Hims & Hers chose to hold back on U.S. weight loss marketing in the third quarter and will do so again in the fourth. CEO Andrew Dudum said the company has "intentionally pulled back on marketing spend" to prepare for three things: a broader assortment including Eli Lilly products, international expansion, and new specialties. CFO Yemi Okupe said the choice "trades near-term subscriber growth for what we believe is a stronger long-term position," and warned that continued moderation of domestic marketing "may lead to an additional quarter of subscriber count headwinds."

Management's argument is that the Wegovy Pill launch with Novo Nordisk produced record subscriber additions in the first half, and that the company then identified clear gaps in the offering: flexible multi-month subscriptions that lock in pricing, better starter packs for higher doses, and demand from customers explicitly asking for Lilly products such as Zepbound vials. Dudum said he preferred not to "unnecessarily burn that cash" ahead of January, when weight loss demand historically peaks. The company expects to re-engage its marketing engine in the first quarter, with subscriber growth recovering from there and retention benefits building through 2027.

The logic is coherent, and domestic revenue still accelerated to 21% growth, or $657 million, from 16% in the second quarter, even with spending restrained. But the plan depends on a relaunch executed in a compressed window. Management acknowledged that Lilly's Foundayo and Zepbound will be integrated during the fourth quarter, CagriSema is not yet available, and multi-month subscriptions are still to come. The first quarter will therefore be the real test of whether the broader assortment lowers acquisition cost and lifts retention as it has in other specialties.

Lilly Joins Novo on the Platform

The most strategically significant disclosure was an expanded relationship with Lilly, which will let Hims & Hers offer a "seamless experience" across Zepbound and Foundayo alongside Novo's Wegovy Pen and Pill. Dudum argued that assortment is what unlocks category growth because customers differ widely in their goals, side-effect tolerance and preferences on form factor and dosing. He said Lilly's participation should "lift complete volume en masse across all partners," rather than merely shift share between the two manufacturers. Whether that proves true is untested, and an obvious risk is that a two-manufacturer platform dilutes the Novo-driven momentum that reignited U.S. growth. Management offered no quantification of the incremental opportunity.

Guidance: Higher International Revenue, Lower Profit

For the fourth quarter, the company guided revenue of $875 million to $895 million, up 42% to 45%, and adjusted EBITDA of $70 million to $90 million, a 9% margin at the midpoint. The full-year revenue range was tightened to $3.13 billion to $3.15 billion, up 33% to 34%. The EBITDA cut reflects two items: at least $20 million of weight loss membership revenue received in December but deferred into January, and heavier pricing and marketing investment in the U.K. and Germany ahead of the first-quarter acquisition season. The deferral is a timing issue with no free cash flow impact, but the international investment is a genuine reallocation of profit toward growth.

International revenue expectations for 2026 rose to at least $650 million from $600 million. Third quarter international revenue more than quadrupled to $233 million, including roughly $135 million from Eucalyptus, with the rest of the international business growing nearly 80%. Management said international is on track to surpass a $1 billion revenue run rate in 2027. Okupe said the company expects to "lean aggressively" into pricing and marketing in the U.K. and Germany and expects those markets to become "the next wave of future profit generators." The company is also consolidating its brands under Hims & Hers in the U.K., Germany and Australia, which management admitted will cause near-term subscriber volatility.

Margins: Mix Shift Is Costly, and Management Deflected on the Outlook

Gross margin of 57% was down about 7 points sequentially, driven primarily by branded weight loss products in international markets, which carry lower margins, and by the first full quarter of Eucalyptus. Okupe said the pace of decline should moderate as the mix shift slows. Pressed by Morgan Stanley's Craig Hettenbach on the longer-term path, he steered toward adjusted EBITDA dollars as the key metric and said gross margin expansion would come over the mid-to-long term as sexual health, dermatology and testosterone scale abroad. That is a reasonable operating philosophy, but it offers no near-term gross margin target, and the guidance implies a flat 9% EBITDA margin rather than expansion.

Operating leverage below gross profit was real. Marketing fell 7 points sequentially to 28% of revenue, operations and support improved 1 point to 12%, and GAAP G&A improved 5 points to 17%. Adjusted EBITDA rose 37% sequentially to $82 million, a 9% margin, though the company reported a GAAP net loss of $33 million. Free cash flow was $26 million on $65 million of operating cash flow, and cash and investments totaled over $710 million. Management expects positive free cash flow for 2026 and is "well-positioned" to repeat it in 2027.

AI-Native Care Platform Shows Early Engagement Data

CTO Mo Elshenawy said the AI-native experience reached roughly 70% of weight loss subscribers at quarter end, with nearly 100% expected before year-end. Customers with access send 4x as many messages, and average response time for non-clinical questions is now measured in minutes rather than hours. Providers receive AI-drafted responses informed by each patient's chart, and AI tools help complete medical charts so clinicians spend less time on documentation. Engineering had its largest hiring quarter ever, and teams are shipping platform updates in under a day.

Management is explicit that AI is meant to deliver cost savings as well as better retention. Okupe cited "strong early signals" that meaningful improvement to U.S. operating cost structure is possible, with savings to be reinvested in expansion. Technology and platform spending was 8% of revenue. What is missing is hard evidence linking higher engagement to improved retention or lower cost per subscriber. For now the data show more messages, not better economics.

Controlled Substances and Peptides: Pushing Into Higher-Complexity, Higher-Regulatory-Risk Categories

The company launched injectable and oral testosterone replacement therapy, its first controlled substances, and says testosterone is progressing toward a $100 million annualized run rate. Hers is progressing toward $1 billion of revenue this year, supported by dermatology and menopause.

A Peptides+ offering is due later this month, initially with sermorelin, glutathione and NAD+, with BPC-157 and TB-500 to follow "when the regulatory environment permits." Revenue from peptides is not expected to be material in the fourth quarter, and management says it will use gated investment. Dudum said the company acquired and integrated a peptide manufacturing facility in Menlo Park and, for newer peptides where raw API supply chains are "not really at the quality that we'd like to see," plans to manufacture the APIs itself, which he said makes Hims & Hers "really the only company in the U.S. capable of having that degree of quality oversight." On regulation, Dudum said the proposed HHS ruling is in a comment period, with the FDA's position expected in a couple of weeks, which will determine API testing requirements and facility standards. This is a real opportunity with an unresolved rulemaking attached. Andrew Huberman has joined the board and will advise on science and brand marketing.

Canada as the Template for Generic GLP-1 Economics

Management offered Canada as evidence that falling prices help rather than hurt. Since generics became available earlier this year, average monthly orders have grown more than 50% and margins are benefiting from a mix shift toward lower-cost options. Dudum argued the pattern mirrors U.S. sexual health and hair: competition lowers prices, which broadens uptake and duration, and verticalization then lifts per-script margins. He cited nearly a dozen new therapies in Phase II and III and a "very clear line of sight" to generics in the U.S. and EU. This is a single-market data point early in its life, and the U.S. weight loss business is currently built on branded products at higher price points with lower margins. The thesis is plausible, but the U.S. margin path has yet to be demonstrated.

Wearables: Plan to Sell Devices at Near Cost

In response to a retail shareholder question, Dudum said Hims & Hers intends to integrate all major wearables and eventually offer its own devices as part of membership "at near cost with really no data subscription lock-ins." His view is that value will accrue to the clinical and care management layer rather than data collection. No timeline or financial detail was provided, and a near-cost hardware strategy would be margin-dilutive unless it demonstrably improves retention.

Overall, the quarter shows a company with strong top-line momentum choosing to forgo near-term subscriber growth and profit for assortment, international share and platform expansion. The stakes are concentrated in the first quarter of 2027, when marketing resumes with Lilly and Novo products, multi-month plans and the AI experience all in place. Management plans to provide its 2027 outlook and a longer-term scorecard next quarter.