Hims & Hers Grew Revenue 38% and Still Lost Money. That's the Real "Neutral."

On September 11, JPMorgan's Bryan Smilek started fresh coverage of Hims & Hers Health at Neutral with a December 2027 price target of $32 — a modest step above where shares trade near $25. Neutral from a pay grade above the stock usually means "fine company, fair price, watch execution." But the reason behind this one is worth the data, because it is not a growth problem at all.

Hims & Hers just reported its biggest top-line quarter ever — revenue up 38% to $753 million — and lost $86 million doing it, swinging from a $42.5 million profit a year earlier. Gross margin fell from 76% to 64%. Subscribers hit nearly 2.9 million, up 19%. Growth is not the question. The economics are.

The margin engine that ran the stock to $70

Eighteen months ago, Hims & Hers was the market's favorite weight-loss trade because it sold compounded semaglutide — a nearly identical copy of Ozempic made outside the FDA's normal approval pipeline — for a fraction of the brand price. Compounders can do this legally only while the real drug is in shortage, and the economics were the point: the company controlled the cost of what it sold and kept a fat proprietary markup on it. In late 2025 the stock traded as high as $70 and its 52-week range ran from $15 to $70.

Then the ground gave way. In February 2026 the FDA said the semaglutide shortage was resolved and signaled a crackdown on compounders; Novo Nordisk, the drug's owner, filed suit. Shares fell as much as 27% in a day and the stock collapsed roughly 50% within weeks.

On March 9 the company folded its hand. It announced a strategic shift to stop advertising compounded GLP-1 drugs, prioritize FDA-approved branded medications, and signed an agreement to resell Novo's Ozempic and Wegovy — with Novo dropping its lawsuit. The regulatory nightmare was over. It was replaced by an economic one.

Growth by price, not by market

Here is the trade Hims & Hers made. A branded drug is someone else's product, resold at a thin markup. As branded volume floods through, cost of revenue more than doubled year-over-year to $272 million while revenue rose 38% — the expensive drug costs are now washing straight through the income statement. JPMorgan counts more than 125,000 Novo Wegovy shipments in the first six weeks and projects GLP-1 revenue of about $1.1 billion this year, up 46%. The volume is real. The margin is not what it used to be.

Look closer and even the 38% headline is doing heavy lifting. U.S. revenue grew 16% in the quarter; over the first half of the year it rose just 3%. The rest of the pop comes from the rest-of-world segment, up 17-fold and inflated by the June close of the Eucalyptus acquisition, plus the fact that each customer now spends more — $92 a month versus $76 a year earlier — because branded pills cost more than compounded ones. Same-ish customers, pricier products, bought with an acquisition. That is revenue growth by price and by deal, not by a suddenly larger market.

To be fair, the bulls expected all of this. Chief Financial Officer Yemi Okupe has called the near-term pain "financial noise", and management took $38 million in first-half restructuring charges to write down the compounding chain it no longer needs. The forward case is that margins rebuild as the platform scales: the company guides to adjusted EBITDA of 9% to 10% of revenue this year, promises a return to net profitability in 2027, and holds to 2030 targets of $6.5 billion in revenue and $1.3 billion in adjusted EBITDA — a roughly 20% margin, about double today's.

The whole bet is the margin, and that's the Neutral

Now the price does the explaining. Shares sit near $25 with a market cap around $6.4 billion and a forward P/E in the low 70s. That multiple is not a price for a company losing money this year. It is a price that assumes the 2030 margin target actually arrives. JPMorgan's $32 target is the same assumption with a discount applied — bullish on the destination, unwilling to pay for the whole coattails of the journey at today's quote. That is what Neutral means here.

So this is the honest read of the transition. The crisis that broke the stock is resolved: the compounding risk is gone, the lawsuit is settled, Novo is now a supplier instead of an adversary. But resolving the regulatory problem handed back the economics. Hims & Hers is no longer selling a high-margin product it mostly controlled; it is a distribution layer sitting on top of drugmakers' products, and its valuation now rests entirely on rebuilding margin from the low double digits to twenty. That is a real, unproven climb — and it is exactly the piece JPMorgan declines to underwrite at this price. The growth was never in dispute. The margin is, and until the margin comes back, the "Neutral" is just arithmetic.