Shares of telehealth platform and direct-to-consumer (D2C) personal care products provider Hims & Hers Health (NYSE: HIMS) fell 6.7% on Wednesday, Sept. 23, as investors continue to weigh the fallout from August’s disappointing earnings report and mounting legal pressure, including a securities class action filed earlier this month and an ongoing FTC lawsuit over alleged privacy and billing practices.
HIMS’ year-to-date (YTD) loss is over 12%, including a nearly 26% loss from its YTD high on July 6.
For shareholders who have already endured the stock’s elevated volatility this year, the ongoing legal scrutiny could further fuel a downtrend that has seen the stock shed more than 45% of its value over the past year.
Hims & Hers Faces FTC Lawsuit and Securities Class Action
On July 29, the U.S. Federal Trade Commission (FTC), the Utah Division of Consumer Protection, and Los Angeles County Counsel on behalf of California sued Hims & Hers in a joint federal lawsuit.
The lawsuit alleges that the company shared consumers’ sensitive health information with third-party advertising platforms, including Meta Platforms (NASDAQ: META) and Snap (NYSE: SNAP), despite promising patient privacy.
According to the complaint, Hims & Hers made subscriptions difficult to cancel, routinely processed initial refill charges 10 days before consumers’ selected cadence, and charged for prescriptions almost immediately after consumers submitted an intake form, despite telling them that they could first consult with a medical provider to find a treatment that is “right for them.”
Hims & Hers disputes the allegations and has said it intends to vigorously defend itself against the FTC’s claims.
Building on the FTC’s filing, a separate securities class action filed on Sept. 1 aims to represent Hims & Hers’ shareholders who purchased or acquired the company’s securities between Aug. 4, 2025, and July 29, 2026.
The class action cites many of the same alleged privacy and billing practices described in the FTC case. It further contends that Hims & Hers and certain executives violated the Securities Exchange Act of 1934 by making materially misleading statements about the company’s business, operations, and prospects and failing to disclose that those practices could expose the company to regulatory scrutiny and potential financial penalties.
Investors seeking appointment as lead plaintiff in the class action have until Nov. 2, 2026, to file a motion with the court, according to Robbins Geller Rudman & Dowd LLP, a securities-fraud law firm publicizing the class action.
Legal Setbacks, Earnings Misses Cloud Hims & Hers’ Outlook
The FTC and class-action lawsuits are some of the latest instances in a series of headwinds the D2C healthcare company is currently facing. Between those two legal setbacks, Hims & Hers reported a Q2 earnings miss on Aug. 10, its second consecutive miss and fourth in the past five quarters.
Despite strong subscriber growth and 38% year-over-year (YOY) revenue growth, the Q2 report had numerous areas of concern. Q2 earnings per share (EPS) of negative 37 cents missed analyst expectations of negative five cents, and marked a significant YOY drop from Q2 2025’s EPS of 17 cents.
Hims & Hers reported a net loss of $86.3 million in Q2, a concerning reversal from net income of $42.5 million in the same quarter a year earlier. Meanwhile, adjusted gross margin fell to 64%, down about six percentage points quarter over quarter.
The company’s Q2 report did provide some positive takeaways, though. But those came with caveats. Hims & Hers expanded access to branded GLP-1 weight-loss products, while international revenue—driven by the acquisition of Eucalyptus earlier in 2026—grew.
However, Q2 free cash flow was negative $68 million, and Hims & Hers recorded roughly $81 million in acquisition, restructuring, and FTC-related legal costs. With the FTC case still pending and the securities class action now underway, legal expenses could remain a headwind.
Revenue and Subscriber Growth Offer a Silver Lining
In Q2, Hims & Hers saw an acceleration in both top-line and subscriber growth.
Revenue of $753.21 million exceeded analyst expectations of $698.9 million while representing a more than 38% YOY increase, and management raised full-year 2026 revenue guidance to a range of $3.1 billion to $3.3 billion.
The company gained roughly 300,000 new subscribers, bringing its total to nearly 3 million. Additionally, Hims & Hers’ investment in AI is beginning to bear fruit. The company reported early benefits from its AI-native care platform, including a 3x increase in customer messaging, an approximately 50% reduction in non-clinical support tasks, and lower cancellation rates in pilot cohorts. Management expects AI investments to pay back within 12–18 months and support improved retention and cost efficiency.
Still, Wall Street’s expectations appear to be tempered. Based on the 16 analysts currently covering the stock, only three assign it a Buy rating. Overall, HIMS receives a consensus Hold rating alongside a 12-month price target that implies around 13% potential upside.
But with a beta of 2.42, the stock is 142% more volatile than the broad market, which has kept it in the favor of bearish traders. Current short interest is 26.69%, or nearly 55 million shares of the more than 233 million shares outstanding. As the company continues to grapple with earnings disappointments and costly legal pressure, investors should expect ongoing volatility.
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