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Shares of Hims & Hers Health (HIMS.N) fell 15% premarket on Tuesday after the telehealth company missed Wall Street estimates for first-quarter revenue and posted a surprise loss, hurt by changes in its weight-loss offerings.
The company said late Monday that it made a strategic pivot in the quarter towards branded GLP-1 weight-loss drugs, which pressured its margins and domestic sales.
A shift to shorter shipping schedules led to a change in revenue recognition timing for some weight-loss products, affecting its U.S. topline, the firm added.
The results were soft and reflected a "transition period" for Hims & Hers, Leerink Partners analyst Michael Cherny said.
The company said while its transition to branded GLP-1 weight-loss drugs from compounded versions introduces restructuring costs, it expects to return to profits in 2027.
Hims & Hers had previously leaned on compounded versions of GLP-1 drugs, which are typically cheaper than branded treatments such as Novo Nordisk's (NOVOb.CO) Wegovy and Eli Lilly's (LLY.N) Zepbound.
The U.S. Food and Drug Administration, however, moved to restrict compounding of copycat versions of GLP-1 drugs. It referred the firm to the Department of Justice over potential violations, sending its shares down more than 10% earlier this year.
The company reported a loss of 40 cents per share for the three months ended March 31. Analysts on an average expected a profit of 4 cents per share, according to data compiled by LSEG.
The loss was due to write-downs Hims took on ingredients used to compound semaglutide, the active ingredient in Novo's Wegovy, and one-time legal and merger costs, Chief Financial Officer Yemi Okupe said.
