Hims & Hers reported a negative EBITDA margin for the second consecutive quarter, a result that contrasts sharply with the positive adjusted figures presented by management. The company's unadjusted profitability turned negative in the March 2026 quarter at negative 4.3% and fell further to negative 8.8% in the June 2026 quarter. This decline occurred despite revenue growing 40% year over year to $753 million in the latest period.
The deterioration in profitability coincides with a steady erosion of gross margin, which has declined for eight straight quarters. Gross margin fell from 79% in September 2024 to 63.8% in the June 2026 quarter. This eight-quarter slide began before the company completed its acquisition of Eucalyptus in June and preceded the full rollout of its international markets in the UK, Australia, and Germany.
Chief Technology Officer Mohamed ElShenawy attributed the path forward to an AI-native care platform integrated into the Hers weight loss business in July. ElShenawy stated that the system is currently answering 80% of incoming customer questions and has reduced nonclinical support tasks by half. Management expects this technology to pay for itself within 12 to 18 months, with savings partially redirected toward lower prices and international expansion.
The discrepancy between reported and adjusted results stems from significant exclusions in management's adjusted metrics. In the June quarter alone, Hims & Hers stripped out approximately $81 million in costs from its adjusted EBITDA calculation. These excluded items included expenses related to the Eucalyptus acquisition, restructuring tied to the weight loss pivot, and legal accruals associated with an FTC lawsuit filed in late July. While some of these costs are one-time, the reported margin had already turned negative in March, months before the Eucalyptus deal closed, indicating underlying cost pressure existed prior to the acquisition.
CEO Andrew Dudum described the quarter as being "about a single word: proof" during the earnings call. However, the company's adjusted EBITDA margin, which management highlighted as rising to 8%, sits significantly higher than the negative reported figure. Investors are now weighing whether AI-driven efficiency gains can scale quickly enough to close this gap. Fourth-quarter guidance implies an adjusted EBITDA margin near 12%, a target that relies on the rapid adoption and cost-saving potential of a platform that has been operational for only three months in one product line.