By Amina Niasse and Siddhi Mahatole
May 11 (Reuters) - Hims & Hers Health missed Wall Street estimates for first-quarter revenue and posted a surprise loss on Monday, as the telehealth company's shift toward branded GLP-1 weight-loss drugs pressured its margins and domestic sales.
Shares of the company fell more than 12% in extended trading to $25.55, even as Hims raised its full-year revenue forecast on expectations that a partnership with Novo Nordisk and international growth will help boost sales.
The company said that while its transition to branded GLP-1 weight-loss drugs from compounded versions introduces restructuring costs, it expects to return to profits in 2027.
"We historically had focused on operating cash flow, which remained positive. It's the North Star for the company," said Yemi Okupe, Chief Financial Officer. "With that said, we would expect to return to profitability and be well-positioned for profitability in 2027."
Hims has seen record levels of engagement and traffic on its platforms after pivoting to FDA-approved drugs, like Novo Nordisk's Wegovy, Okupe said.
In March, Hims said it would partner with Novo Nordisk to offer its blockbuster weight-loss drug, Wegovy, on its platform, ending a legal dispute between the companies.
The dispute had followed Hims' launch of a low-cost compounded alternative to the Wegovy pill, which it has since stopped advertising.
Hims now expects its annual revenue between $2.8 billion and $3 billion, compared with its previous forecast of $2.7 billion to $2.9 billion.
Morningstar analyst Keonhee Kim, however, said that it may be too soon for Hims' partnership with Novo to drive growth, adding the company's forecast is largely based on the acquisition of other businesses.
Hims has been shifting its strategy toward personalized treatments, amid tightening regulatory scrutiny.
Earlier this year, the U.S. Food and Drug Administration moved to restrict the compounding of copycat versions of GLP-1 drugs, and referred Hims to the Department of Justice over potential violations, which sent its shares down more than 10% this year.
Hims' CEO Andrew Dudum said on the post-earnings call that the company also plans to begin selling some peptides, often used for longevity, wound healing, skincare and obesity if the FDA eases restrictions on 12 of them as it has signaled.
He said the company may not be the first to sell peptides, but it would do so "at scale."
Hims monthly revenue per average subscriber fell to $80 from $85 a year earlier.
Revenue for the first quarter came in at $608.1 million, below analysts' expectations of $616.85 million.
Jailendra Singh, an analyst at Truist, said the average per-customer spending on an order for GLP-1s at Hims may have increased due to the bundled nature of the purchases.
The company also reported a first-quarter loss of 40 cents per share, compared with analysts' estimate for a profit of 4 cents per share.
The loss was due to write-downs the company took on ingredients used to compound semaglutide, the active ingredient in Novo's Wegovy, in addition to one-time legal and merger costs, said Okupe.
Hims expects second-quarter revenue in the range of $680 million to $700 million, compared with analysts' average estimate of $642.95 million, according to data compiled by LSEG.
(Reporting by Siddhi Mahatole and Amina Niasse; Editing by Shinjini Ganguli)
