Hims & Hers Health (HIMS) reported Q1 2026 earnings on May 11 and the stock dropped. Revenue of $608.1 million missed the $616.9 million estimate. The GAAP loss came in at $0.40 per share, far below the $0.01 gain Wall Street expected. On the surface, it looks like a mess. But the surface is the wrong place to look.

The miss was not a growth problem. It was a deliberate transition out of high-margin compounded semaglutide and into FDA-approved Wegovy and Ozempic through a new Novo Nordisk partnership. The company stopped its best-performing product on purpose. And then raised full-year guidance anyway, to $2.8 billion to $3.0 billion from a prior range of $2.7 billion to $2.9 billion. The stock is now sitting near $29, down more than 58% from its 52-week high of $70.43.

That setup is worth understanding.

The Earnings Miss Had a Reason
In March 2026, Hims & Hers settled a patent lawsuit with Novo Nordisk and agreed to stop widely advertising compounded GLP-1 drugs. In exchange, Novo Nordisk granted the platform access to sell branded Ozempic and Wegovy, including a new oral Wegovy pill, directly to consumers through its telehealth interface. The deal went live in late March.

That means Q1 captured roughly one week of the new product lineup, at lower margins than the compounded version it replaced. The 3.8% revenue growth figure reflects that gap period. The company intentionally walked away from its highest-margin product before the replacement was fully ramped. That explains the numbers without excusing them.

Q2 guidance came in above estimates. Management is confident the back half of 2026 looks materially different. The $6.5 billion long-term revenue target by 2030 is anchored to this pivot working.

J.P. Morgan Just Bet on the New Model
J.P. Morgan initiated coverage of HIMS with an Overweight rating and a $35 price target on the same week as the earnings report. That is 20% above the current price. The thesis was direct: the Novo Nordisk deal is a turning point. Selling FDA-approved drugs through a telehealth platform at scale is a different and more defensible business than compounding gray-market alternatives.

It is kinda like a restaurant that built its reputation on a signature dish, got sued over the recipe, and then partnered with the original creator. The menu got more expensive. But the legal liability disappeared and the brand got cleaner. Customers willing to pay more for the real thing are stickier than customers looking for a cheap knockoff.

The broader analyst picture is mixed. Average price target sits around $31.86, implying roughly 7% to 9% upside from current levels, with 17 analysts covering the stock. The highest target is $68. The lowest is $11. That range tells you everything about how divided the Street is on whether this pivot works.

The Real Risk Is Margins
You do not have to trust the optimistic version. The bear case is straightforward. Compounded semaglutide carried much higher margins than branded Wegovy. Hims & Hers is now selling a product it has to buy from Novo Nordisk at wholesale and resell through a telehealth platform. The margin structure of that business is fundamentally different from what drove the stock to $70.

The company is also adding international exposure fast. It announced plans to acquire Eucalyptus, which operates across Australia, the UK, Germany, Japan, and Canada, with over $450 million in annualized recurring revenue. That deal is not in current guidance. Integration adds cost and complexity to a company already mid-pivot.

Hold on. Let me stop here. The 52-week low is $13.74. The stock touched that number because the original GLP-1 compounding model faced an FDA crackdown and a Novo Nordisk lawsuit at the same time. That existential risk is now resolved. The company that exists today is not the same company that traded at $13.74.

Bottom Line
HIMS at $29 is a company in the middle of a messy but deliberate transformation. The Q1 miss was a feature of the transition, not a sign of structural failure. Full-year guidance was raised to $2.8 billion to $3.0 billion despite the miss. J.P. Morgan sees 20% upside. The consensus target is $31.86.

The question is not whether Hims & Hers can grow. It clearly can. The question is whether the new business model generates margins worth owning at this price. That answer starts arriving in Q2 earnings. You do not have to trust management. Trust the guidance raise. Companies do not raise guidance in bad-faith transitions. They guide down.

Source: Money Morning