FIGS, Inc.: A High-Conviction Buy Amid Strong Earnings, Margin Expansion, and Outperformed Guidance

The healthcare apparel sector is undergoing a transformation driven by operational efficiency and sustainable top-line growth, and FIGS, Inc. (NYSE: FIGS) stands at the forefront of this evolution. With Q3 2025 results showcasing an 8.2% year-over-year revenue increase to $151.7 million and a gross margin expansion to 69.9%-despite a 120-basis-point drag from tariffs-the company has demonstrated its ability to navigate macroeconomic headwinds while outperforming expectations, according to FIGS' Q3 2025 results. For investors seeking a high-conviction play in a resilient industry, FIGS offers a compelling case built on disciplined cost management, strategic innovation, and alignment with long-term market tailwinds.

Operational Efficiency: The Engine Behind Margin Expansion

FIGS' Q3 performance underscores its mastery of operational efficiency. By reducing promotional discounts, optimizing returns processing, and leveraging lower inbound freight and duty rates, the company achieved a gross margin of 69.9%, a significant improvement from prior periods, as reported in FIGS' Q3 2025 results. These gains were further amplified by a 4% year-over-year increase in active customers to 2.8 million, reflecting strong brand loyalty and product differentiation, according to FIGS' Q3 2025 results.

Cost discipline has been another pillar of FIGS' strategy. Operating expenses declined, particularly in marketing spend, which contributed to a net income of $8.7 million-a stark reversal from a loss in the same period last year, as noted in FIGS' Q3 2025 results. This operational rigor has allowed FIGS to revise its full-year 2025 guidance upward, projecting higher net revenue growth and adjusted EBITDA margins above initial forecasts, as highlighted in FIGS' Q3 2025 results. Such flexibility is rare in sectors facing inflationary pressures and supply chain disruptions, making FIGS' execution a standout.

Sustainable Top-Line Growth: Aligning with Industry Trends

The healthcare apparel market is poised for robust growth, with the global market projected to expand at a 7.1% CAGR through 2030, reaching $159.8 billion by 2030, according to Mordor Intelligence. Key drivers include post-pandemic infection control protocols, rising demand for disposable surgical gowns, and advancements in antimicrobial textiles. FIGS is uniquely positioned to capitalize on these trends.

The company's focus on core scrubwear-its most profitable category-has been a strategic win. By improving product fit and reducing returns, FIGS has enhanced customer satisfaction while lowering operational costs, as detailed in FIGS' Q3 Deep Dive. Additionally, its international expansion, which has grown from 33 to nearly 60 markets, opens new revenue streams. Upcoming launches in China and other Asian markets, coupled with the introduction of innovative fabrics like FIBERx, position FIGS to capture market share in high-growth regions, according to FIGS' Q3 Deep Dive.

A Sector in Sync with Technological Disruption

While FIGS operates in a traditional sector, it is not immune to the transformative forces reshaping healthcare. The integration of AI and computer vision in medical imaging and diagnostics-markets growing at 32.8% and 35.25% CAGR, respectively-indirectly benefits healthcare apparel by streamlining hospital workflows and reducing manual interventions, according to Fortune Business Insights. This creates a flywheel effect: as hospitals adopt digital tools to improve efficiency, they also demand higher-quality, more specialized apparel to support optimized operations.

FIGS' recent $100 million credit facility extension, which reduces undrawn fees and extends maturity to 2030, further strengthens its balance sheet, according to FIGS' Q3 2025 results. With $46.5 million in cash and $195.1 million in short-term investments, the company has the liquidity to fund innovation and share repurchases, which have already returned $2.7 million to shareholders in 2025, according to FIGS' Q3 2025 results.

Conclusion: A Buy for the Long-Term

FIGS' combination of margin resilience, operational agility, and alignment with secular growth trends makes it a rare high-conviction opportunity. While short-term challenges like tariffs persist, the company's proactive cost management and product innovation have insulated it from broader economic volatility. For investors with a 3–5 year horizon, FIGS represents a compelling entry point to participate in the healthcare apparel sector's next phase of growth.