Hims & Hers Health’s shares fell nearly 7% in premarket trading on Tuesday, as concerns over shrinking profit margins overshadowed strong subscriber growth and a raised annual revenue forecast.
Financial Performance
The company posted second-quarter revenue that topped expectations and added more than 300,000 subscribers. However, its aggressive push into branded weight-loss products and international expansion drove up costs, swinging the quarter to a loss versus a profit a year earlier.
Wall Street analysts warned that the aggressive push for growth could be hurting profitability. Morningstar analyst Keonhee Kim said the subscriber growth was impressive but not enough to overlook the continued margin decline after gross margins fell for the fourth straight quarter.
Chief financial officer Oluyemi Okupe acknowledged the trade-off on an analyst call, saying “As branded weight loss products and international revenue become a larger portion of the business, we expect gross margins will remain below the levels we have historically achieved.”
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
