Hims & Hers Health, Inc.

Hello everyone. Thank you for joining us and welcome to the Hims & Hers Health second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Bill Newby, Director of Investor Relations. Bill, please go ahead.

Good afternoon, everyone, and welcome to the Hims & Hers Health Second Quarter 2026 Earnings Call. On the call with me today is Andrew Dudum, our Co-Founder and Chief Executive Officer, Yemi Okupe, our Chief Financial Officer, and Mo ElShenawy, our Chief Technology Officer. Before I hand it over to Andrew, I need to remind you of legal safe harbor and cautionary declarations. Certain statements and projections of future results made in this presentation constitute forward-looking statements that are based on, among other things, our current market, competitors and regulatory expectations, and are subject to risks and uncertainties that could cause actual results to vary materially. We take no obligation to update publicly any forward-looking statement after this call, whether as a result of new information, future events, changes in assumptions, or otherwise. The risks, uncertainties, and other factors that could cause actual results to differ from our forward-looking statements are described in our earnings release and SEC filings. Please see our recent earnings release and most recently filed 10-K and 10-Q reports for a discussion of these risk factors as they relate to forward-looking statements. In today's presentation, we also have certain non-GAAP financial measures. We refer you to the reconciliation tables to the most directly comparable GAAP financial measures contained in today's press release. You can find this information as well as a link to today's webcast at investors.hims.com. After the call, this webcast will be archived on the website for 12 months. And with that, I'll turn the call over to Andrew. Thanks, Bill.

Good afternoon, everyone, and thank you for being here. This quarter, we made significant progress on building a first-of-its-kind health experience that proves it is possible to deliver access to world-class care on a global scale at a reasonable price. As our customer base grows and our influence on the industry deepens, we are showing that a business can both take care of people and be profitable. Before Yemi walks us through financials, I want to highlight three key areas driving our continued growth. First, our investment in AI and technology is delivering a health experience that we believe no other company can replicate. Our CTO, Mo ElShenawy, is on the call today to walk us through how that is coming to life in both deeper customer relationships and increasing business efficiencies. Second, our world-class infrastructure means we can not only support customers across a greater spectrum of needs from beginning to end, but also safely enter more complex categories at a faster pace and at a greater scale than others in the industry. And third, our global reach, when paired with our technology and infrastructure, has created a platform that shows customers and industry leaders alike that access to high quality care can be personal and widely accessible. Hims & Hers is building something entirely new, and it is increasingly difficult to replicate. Nearly 3 million customers believe in a future of health that is proactive, personal, and built for their lives, and we are thrilled to be the partner bringing it to them every day. Let's start with our investment in AI. By weaving AI into the entire platform, we'll deliver a unified, AI-native health experience we believe no other peer or LLM can match. Mo, our CTO, will walk us through what that looks like for our customers and the early success we've seen. But I want to start with the why. Why we are taking this approach and why we know it is the path to dramatically improving the care experience for customers everywhere. In the second quarter, we welcomed more than 300,000 subscribers, bringing our global subscriber base to nearly 3 million people. To put that into context, we are now serving a patient population that rivals some of the largest healthcare systems in the United States. And unlike frontier AI companies that many people currently rely on for day-to-day advice, we support customers through their entire health journey, from their very first question to their clinical treatment and continued follow-up care. That end-to-end, closed-loop relationship combined with our scale is incredibly powerful. Customer trust isn't something you can buy. It has to be earned. For nine years, millions of people have trusted HIMS & HERS to help them feel comfortable seeking care for conditions that should be normalized. We have earned that trust by listening to their concerns, for finding solutions to meet them, and delivering outcomes year after year, specialty by specialty. Nine years of data that deepen our evidence base of what works, for whom, and why. That accumulated understanding is what makes our platform different. It's powered by the millions of customers who have shown us just how impactful great care can be and that's why they trust us with what comes next. Other health companies major in the minor. They tack on minor improvements to the existing system while we're making our platform completely AI-native so that our platform can provide an integrated experience that is alive and personal. One where AI coaches and support agents, a care team, a clinician, and a pharmacy are one unified system with a single goal, keeping people well. Our customers don't just ask us about their health or seek out specific treatments through our platform. They go on a long journey with us. And we believe the intelligence we're building around that relationship will make HIMS & HERS their preferred everyday health partner. I'd now like to turn it over to Mo to speak more on how this is coming to life.

Thanks, Andrew. Our AI-centered technical strategy is the difference between adding a feature and reimagining the entire customer experience. We are making AI load-bearing, not decorative. We are replacing the traditional telehealth model with something entirely new for our industry. A unified care experience where customers care team lives in a single platform that already knows them. No portals, no starting over, no explaining yourself to a tool that can only give you one size fits all advice. Just care that is built for you, guided by data, delivered by clinicians, and powered by seamless technology. This is the foundational customer experience which we plan to roll out across our entire platform over time. It leverages our closed-loop data and it is becoming the basis for personalization across the entire journey. Smarter outreach, earlier risk signals, and tools that help providers tailor treatment to each patient. We are seeing impacts for our customers and our business as a result of this approach, and I would like to walk you through both. To start, the AI native experience we just launched for Hers weight loss customers is driving meaningful change for the people who come to us for care. We began a phase rollout in early July, and the results were immediate. Customers began engaging more often. Hers customers using the new care experience are sending three times as many messages on the platform, with AI answering 80% of their questions to support their treatment journey. As a result, AI has reduced non-clinical tasks like order updates and general side effect questions that are handled by our support teams by nearly 50%. We know that a lack of engagement and poor adherence can lead to poor outcomes, which is why we're thrilled to see customers having more engaged, intentional conversations without overloading our care teams. This also means clinical challenges like dosage adjustments or changes in treatments can be identified and flagged for a provider more quickly, resulting in an earlier interventions that help our customers stay on track. In just a few months, the internal updates we've rolled out are powerful enough that we have meaningfully reduced how much we rely on agentic AI customer support vendors. And eventually we expect to roll off them completely. We've built a clinically grounded agentic AI customer support experience that we believe serves our customers better. We are excited to bring the experience to more of our customers across the world, and we think we are moving closer to a future where the model we're building becomes the backbone for health platforms beyond hims and hers. We're also continuing to invest in our core technical foundation, rebuilding core components so that updates to our customer flow, product fulfillment, and catalog management are all modular. This will allow us to stand up new categories and markets in a fraction of the time it used to take us, at a lower cost to us, which has historically translated into lower prices for our customers. This is just the beginning of how we are weaving AI into every step of the customer journey. And these early signals are why we are accelerating our investment in bringing this experience to life for all of our customers. In the coming months, we plan to add new AI talent to the team, continue to develop our existing talent, and open an AI R&D lab in Menlo Park, where the team responsible for this innovation can work together in the heart of Silicon Valley. We expect this investment to pay for itself in short order. Importantly, we're not doing this to replace providers, but instead to elevate them. We feel strongly about always keeping clinicians in the loop and in charge of clinical decisions. At Hems & Hers, AI takes the routine work off clinicians' plate so they can spend their time on judgment, complexity, and the person in front of them. Our AI is bound by clinical protocols and guidelines developed by our medical experts, not the open internet. And every interaction is traceable and auditable by design. We are taking this approach because we know AI models are becoming a commodity. And on their own, they are an incomplete part of a wider health experience. The only way to confidently build an AI infrastructure that can improve clinical outcomes is by tracking those outcomes. We believe we are the only company operating a closed loop that includes the intake, the treatment, the follow-up, and the outcome at this scale. And the system learns from all of it. We believe this will have a transformative impact on our business as well. As we roll out this new experience to more customers, we expect we will improve the quality and depth of care accessed on the platform, which will in turn keep customers with us longer and bring new customers through the door. We believe this is something only we can do well. Our advantage is being an everyday partner to customers, rather than just a chatbot that lives on their home screen. We walk alongside our customers throughout their entire journey, helping them find qualified providers and treatments that work. We've built an AI infrastructure that learns not just what works, but what works best for each person. And we have the scale to do it with millions of customers globally, creating an ongoing cycle of improvement. Better care produces better understanding, and better understanding produces better care. This is how we are reshaping what the world thinks is possible in health. And we are only at the start. I am excited to come back next quarter with updates on the progress we will continue to make here. Thank you.

Thanks, Mo. I'd like to move us to the second area of focus for today, our growing ability to do more for the people who trust us with their health and why that matters now more than ever. We can support customers across a wide spectrum of needs from beginning to end because we've spent years building an infrastructure no one else has. It's why we've been able to, and will continue to, enter more complex categories with more tailored, accessible solutions. This is how we support the deep customer relationship you've heard me talk about so often. Our customers are increasingly trusting us with their care across more than one condition, and each additional need they bring to the platform strengthens their trust and extends our relationship with them. We believe we are in the best position to help millions of people get proactive about more complex health challenges that often go unseen or ignored. Testosterone is a powerful example. Thank you so much for joining us. Only three quarters after launch, testosterone is scaling faster than any other specialty outside of weight loss. That gives us real confidence in our ability to expand not only into injectable and oral TRT before the end of this year, but also to extend this model across other specialties. That's part of why we've welcomed Dr. Nant Vengimori as our new Chief Medical Officer of HIMSS, joining Dr. Pat's incredible team of medical leaders who provide our clinical backbone. Dr. Vengimori has more than a decade of clinical experience in internal medicine, primary care, and longevity, which will be a critical part of how we build and expand our offerings in categories like hormonal health, longevity medicine, and peptide therapy. His participation at the recent PCAC hearing demonstrated just how valuable and trusted his voice is among industry leaders and regulators, and his expertise will be a fundamental part of how we accelerate into our next chapter. We've developed the infrastructure to succeed in higher complexity categories, over 1 million square feet of pharmacy and lab testing facilities, deep expertise in sterile compounding, and a global reach. Our verticalization efforts are focused on delivering a better, higher quality experience at a price no one else can match. Which brings me to peptides. Moments like this, where a category is surging in popularity while the market is struggling to find a safe, sustainable way to support it, is where our scale, infrastructure, and ecosystem thrive. We are currently developing a best-in-class peptides experience, including U.S.-manufactured products, clinical-led guidance, and ongoing blood testing. While we wait to hear the FDA's decision on the six peptides recommended at the last month's PCAC hearing, we've started validation and stability testing on APIs for those peptides developed in our Menlo Park facility. This will ensure we can bring them to the market with a safe, verified supply chain if the FDA decides to allow them for compounding. In the meantime, we plan to offer access to already allowed peptides with safe and well-established supply chains before the end of the year. This will include solutions like sermoralin, glutathione, and NAD+. Finally, I'd like to discuss our third area of growth, which underpins everything we've already discussed today, our global scale. The promise of our platform started with what we could do for our customers in the U.S., where we have five specialties operating above a $100 million annual run rate. We are now bringing that comprehensive experience to customers across the world. In June, we became the leading global consumer health platform when we closed our acquisition of Eucalyptus. This was the largest acquisition in our company's history, and we now have three international markets outside of the US also pacing above a $100 million annual run rate. This is the evolution of the company we always knew was possible. For the first time, a single platform can deliver a truly personal, accessible, and effective weight management experience to customers around the world, whether home is Boston, Bristol, or Byron Bay. We plan to make this true for customers in all of our specialties, and I can't wait to share more on our global plans with all of you in the coming quarters. Thank you so much for joining us today. We're now giving more people access to a world-class weight loss experience than any other digital platform in the world. This isn't just a sign of our scale. It's proof that healthcare is finally adopting the consumer-centric model that is already standard in industries like entertainment, travel, and transportation. We are leading a transformation that removes the middle layers and ensures that access goes straight from innovators to consumers. We believe our growing scale and our increasing investment in our technology and infrastructure makes us structurally more efficient than anyone else in healthcare. We plan to continue to leverage our leadership position to deliver more value to customers at better prices. Put more plainly, we're playing offense, and we have the balance sheet and cost structure to sustain it in a way others cannot. This is the beginning of what our platform will deliver for both our customers and our industry partners. We believe we are not far from a future where all of us will be able to access preventive screening, the innovative medications we need to feel great, and a care team supporting our progress, all for an affordable monthly price and tailored for the life we are actually living. I'll end by saying that this quarter has been about a single word, proof. Proof that you can build a world-class health experience at global scale and a reasonable price. Proof that deeper customer relationships and a profitable business aren't in conflict, they strengthen each other. We are proving that Hims & Hers is the destination for the most comprehensive personal health experience in the industry. Nearly 3 million people rely on us daily, and that's a responsibility too big to meet with anything less than the best technology, infrastructure, treatments, providers, and platform that we can provide. You've heard me say this before, that we're building the future of health. But that future is closer than it's ever been, and it's because of the strides we're making on behalf of our customers every day. I'll now pass it over to Yemi to walk through the financials.

Thanks, Andrew. Today, I'll walk through progress made in the second quarter across our key growth levers, as well as investments we are making to bring a better health experience to millions of consumers globally and capture the immense opportunity in front of us. In the second quarter, revenue grew nearly 40% year-over-year to more than $753 million. Expanded assortment, new geographic markets, and elevated consumer experience allowed us to add 300,000 net new subscribers and end the quarter with nearly 3 million subscribers on our platform. Domestic revenue growth accelerated to 16% year-over-year in the second quarter as U.S. operations generated $622 million of revenue. The pivot we made in March to expand the assortment of branded weight loss products on our platform was a key driver of the re-accelerating growth in the second quarter as more subscriber additions offset revenue recognition headwinds from the shift to a monthly cadence in branded weight loss offerings. Increasingly, we view specialties with large audiences such as weight loss and sexual health as strategically important beyond just their direct revenue contributions, as they provide advantages such as first, a meaningful expansion of the cross-sell opportunities across the platform, as consumers often seek treatment for conditions beyond weight. Thank you so much for joining us. Second, it allows us to rapidly deepen the structured dataset across our platform. The more subscribers we serve, the richer our dataset becomes. This allows us to equip providers with tools to better match subscribers with effective treatments, as well as design more customized subscriber tools for follow-up care. Each subscriber makes the platform smarter and better for the next. Finally, our infrastructure is built to continuously capture economies of scale. As our subscriber base grows, we realize efficiencies across our supply chain, including our provider network, pharmacy fulfillment, and follow-up care operations. This reduces our cost to serve, expanding our ability to reach more subscribers at accessible price points. Strength in our domestic operations has provided us with the conviction to invest internationally and bring our value proposition to millions of consumers overseas. In the second quarter, international revenue increased over 17-fold year-over-year to $131 million. We welcomed the Eucalyptus team in June, deepening our presence in Europe and extending our reach to Australian and Japanese consumers. Eucalyptus contributed approximately $40 million of revenue in the second quarter, further accelerating our already strong existing international business that grew 13% quarter-over-quarter organically. Our revenue footprint continues to rapidly diversify across specialties and now also across geographies. Hers is on track to deliver north of $1 billion of revenue this year, and new specialties such as low testosterone continue to serve as strong growth drivers for HIMSS. In fact, in the coming quarters, we expect testosterone will become our sixth U.S. specialty to reach a $100 million annual revenue run rate. Our growing international business makes this diversification even more robust. The UK, Australia, and Germany are each already generating more than $100 million in annualized revenue, with Canada also on track to join this group as well as we scale our generic weight loss offering. We believe we have the infrastructure to improve the overall quality and efficiency of our platform as we continue to scale. Our aim is to continue to drive scale, but do so in a thoughtful way that lays the foundation for robust EBITDA and cash flow generation. Our second quarter results reflect that discipline. Adjusted EBITDA in the quarter was $60 million, representing an 8% adjusted EBITDA margin. This represented a one-point improvement quarter over quarter as operating leverage more than offset gross margin headwinds from the ongoing mixed shift toward weight loss and accelerating revenue contributions from our international business. These results exclude approximately 81 million of non-recurring costs incurred during the quarter, consisting of acquisition and transaction costs primarily related to the closing of our eucalyptus acquisition, restructuring costs following the strategic pivot in our weight loss specialty earlier this year, and legal contingency accruals related to recent litigation with the FTC. Let me briefly address that last item directly. As disclosed in our filings following nearly three years of cooperation throughout the FTC's investigation and several months of good faith settlement negotiations, the FTC filed a complaint on July 29th. Ultimately, we were not prepared to accept the terms we do not believe reflect the facts or the law. We are confident in our position and intend to defend it vigorously. These one-time costs primarily impacted G&A, operations, and support costs during the quarter. Unless otherwise noted, the remainder of my commentary today reflects our results excluding these costs. Gross margins in the second quarter were 64%, down approximately 6 points quarter-over-quarter on an adjusted basis. This compression reflects deliberate strategic action to scale the specialties and markets that we believe will drive the long-term value of our platform. We do not believe anyone else in consumer health has the scale, infrastructure, and balance sheet to invest in this way. As branded weight loss products and international revenue become a larger portion of the business, we expect gross margins will remain below the levels we have historically achieved. What matters to us is that the underlying unit economics of the platform remain strong and that each of these investments expands the base of subscribers we can serve and positions us to unlock efficiencies across our platform over time. In recent quarters, a meaningful portion of our investment has gone into technology and G&A as we've leaned into the engineering and AI organizations and the leadership talent required to deliver a first-of-its-kind health experience to consumers around the world. That investment will continue, but we were encouraged to see modest sequential leverage across both lines this quarter, which we believe offer an early signal that investments here can be meaningfully accretive over time. Those investments are also beginning to generate cost savings elsewhere in the business. Operations and support delivered three points of sequential leverage in the second quarter. This is a reflection of the improving efficiencies we are driving across our pharmacy operations as we increase throughput and early cost savings from the AI initiatives we have deployed across customer support. As Mo mentioned, successful pilots have demonstrated that AI has the capacity to drive a 50% reduction in non-clinical tasks handled by our support teams. Early signs in the same pilot are also demonstrating stronger engagement and lower cancellations for the participating subscribers. As these capabilities mature, we expect the overall subscriber experience to improve and our costs to serve to decline. Finally, we continue to increase efficiency in our marketing spend as we scale. Marketing as a percentage of revenue improved five points a year over year and two points quarter over quarter to 34%. Many of the drivers who remain consistent with past quarters, strengthening retention, improving rates of cross-sell occurring organically across the platform, and years of brand investment helping to lift customer acquisition in lower-cost channels. With that said, we also see two new dynamics that are presenting additional opportunities. First, our collaborations with pharmaceutical innovators like Novo Nordics are resulting in real marketing talents. We've seen groundbreaking treatments draw enormous consumer attention to categories like weight loss, and when people go looking for a trusted, approachable place to start, they increasingly start with HIMS & HERS. We built a platform that makes health simple, personal, and easy to stay with, and that is allowing us to turn consumer curiosity into new care relationships in an increasingly efficient way. Additionally, our expanded international presence unlocks the potential for larger, global brand moments while also driving far greater optionality in where we can deploy capital to drive awareness of our platform. We believe we are in one of the most exciting stages in our history. It is a stage that demands we lean into investment, act decisively on the right M&A opportunities, and attract the caliber of talent that enables us to capitalize on the significant growth runway in front of us. Periodically, we expect this long-term oriented mindset will impact our GAAP results, and that was the case in the second quarter. GAAP net income was a loss of $86 million, which was impacted by the previously mentioned non-recurring acquisition, restructuring, and legal costs. Over the last 12 months, our platform generated over $260 million of operating cash flow. That's inclusive of second quarter results where operating cash flow momentum took a pause due to the increased working capital demands associated with our rapidly expanding branded weight loss offering. During the quarter, operating cash flow was negative 36 million and free cash flow was negative 68 million. Since the end of the first quarter, we successfully completed two actions that we believe will help ensure our balance sheet will not limit our ability to capture the growth opportunities in front of us. First, we established a 400 million receivables facility, giving us an efficient mechanism to convert the growing base of short-dated receivables generated by our branded weight loss offering into cash with capacity that scales alongside the business. Second, we completed a convertible debt offering over 400 million, further reinforcing our balance sheet. Our expectation is to resume free cash flow generation in the second half of the year. After accounting for the approximately $225 million upfront payment made at the closing of Eucalyptus, we ended the quarter with more than $840 million of cash and short-term investments. We also have $225 million remaining on our share repurchase program, which continues to give us the ability to act when we believe the market value of our stock disconnects from its intrinsic value. Taking together our balance sheet, our access to efficient sources of liquidity, and the cash generation of our domestic business give us the flexibility to fund an accelerating platform while continuing to invest with conviction. Our investments will continue to orient around our core strategic growth levers, which we believe will solidify the path toward our 2030 financial ambitions. Thank you for joining us today. First, we are accelerating an investment in our technology and AI capabilities. AI investments on our platform are driving a meaningfully better consumer experience that is resulting in a reduction in cancellations. Subscribers are able to get faster answers to questions alongside a more consistent and personalized experience. Early signals are already demonstrating AI's ability to improve the efficiency with which we serve our subscribers. We expect these benefits to compound with time, unlocking a powerful combination of stronger revenue growth and cost savings. Our expectation is that the AI investments will pay back within 12 to 18 months. More importantly, we believe these capabilities combined with our scale provide structural advantages to reinvest in ways that others cannot across key growth areas like weight loss and international markets. Starting with weight loss, we will deploy a portion of efficiency improvements from AI into making our platform the most accessible place for consumers to begin their weight loss journey. If success across our AI efforts continues, our expectation is that we will unlock more value for our weight loss subscribers by the end of the year in the form of lower prices and our additional tools. This is a playbook we know well. In our sexual health and hair loss specialties, scale allowed us to steadily lower prices for our customers, which expanded our addressable market, strengthened retention, and ultimately drove stronger LTVs and margin expansion. We see a similar opportunity taking shape in weight loss, where our growing scale, improving operational efficiencies, and AI supported care model enable us to make treatment more affordable for more people. Delivering more for less is how we extend the advantages of our platform, and we believe few in consumer health are positioned to do the same. We also expect to redeploy a portion of efficiencies to accelerate growth within our international business. We have the necessary talent to meaningfully evolve the way consumers access their health and wellness needs across Australia, Japan, Canada, Germany, and the UK. And we expect to invest aggressively in these markets as we build category leadership. Importantly, adoption of weight loss solutions across many of these markets still lags the U.S. meaningfully and the same investments that strengthen our leadership position can accelerate growth of the category itself, expanding the market for us and for our industry partners. We expect these markets to emerge as meaningful profit centers as they scale. Lastly, we will continue investing in the operational capabilities and clinical oversight required to bring new offerings to the platform responsibly, including higher complexity offerings like injectable testosterone in the near term and peptide therapies that the regulatory landscape allows. With that, I will walk through our outlook for the remainder of the year. In the third quarter, we are anticipating revenue in the range of $880 to $900 million, representing a year-over-year increase of approximately 47% to 50%. We expect adjusted EBITDA to be between $75 to $95 million, representing an adjusted EBITDA margin of 10% at the midpoint of both ranges. For the full year, we are raising our 2026 revenue outlook to $3.1 to $3.3 billion, representing a year-over-year increase of 32% to 41%. It is our expectation that 2026 adjusted EBITDA will be between $275 and $325 million. These adjusted EBITDA and revenue ranges imply an adjusted EBITDA margin of 9% at the midpoint in both ranges. To help contextualize our outlook, I will highlight a few points. First, we expect the gross margin dynamics we saw in the second quarter to persist through the second half as branded weight loss offerings and international revenue continue to grow as a share of our business. As I discussed earlier, this mixed shift reflects a deliberate decision to scale the specialties and markets we believe will drive the long-term value of the platform. Second, we expect the compounding effect of the weight loss cohorts acquired throughout the first half to drive a meaningful step up in adjusted EBITDA dollars in the second half, accompanied by continued leverage across our operating expenses as revenue growth in the U.S. reaccelerates. At the same time, our guidance is designed to preserve the flexibility to lean further into the investment priorities outlined today as opportunities materialize. Finally, we expect our international business to generate at least $600 million of revenue in 2026, which will continue to operate at or near break-even on an adjusted EBITDA basis as we prioritize scale. Our platform is delivering a combination of value to consumers that we believe cannot be found anywhere else in healthcare. We are addressing more health needs for our subscribers through an experience that becomes more personal with every interaction at prices that become more accessible as we scale. That combination is why more people are choosing our platform than ever before and why they are staying longer and trusting us with more of their health. What's most exciting is that now this is a truly global story. The re-acceleration underway in our US business is paired with leadership positions across key international markets, giving us more consumers to serve, more markets to scale, and more ways to compound our advantages than at any point in our history. All of which reinforce our confidence in achieving our 2030 ambitions of at least $6.5 billion in revenue and $1.3 billion in adjusted EBITDA. Our success would not be possible without the significant efforts of HIMS & HERS employees around the world. I'd like to thank them, our subscribers, and our shareholders for supporting us in our mission to help the world feel great through the power of better health. With that, I will now turn the call back over to Bill to kick off Q&A with two questions from our retail community.

Thanks, Yemi, and thank you to everyone who sent us questions over the weekend. Our first question comes from the HEMS House community who would like to better understand how we're approaching the developing opportunity in peptides. They ask, following the July PCAC recommendations for the 503 peptide list, can you provide more detail on your go-to-market timeline once final FDA guidance is provided? Are you compliance ready to launch within weeks given your existing California facility, or are there additional build-up steps that push this into 2027? And do you still intend to let others go first, or has the July recommendation changed that calculus?

Yeah, great question. Thank you for that. As we said in the past, I'm extremely excited about this category holistically, the peptide and wellness category, and was very excited to see six of the seven go through successfully with the PCAC meeting at the FDA a couple weeks back. To your question on timing, we've made incredible progress in the last couple of quarters. on the clinical guidelines as well as the supply chain that gives me confidence that if and when the FDA does decide to move these peptides to the category one list, we'll be able to move extremely quickly. Specifically, we brought on Dr. Anand Vinjamuri as our chief medical officer on the HIMSS side of the house who is an expert across hormonal therapy, longevity, and peptide therapy. He's been building out the clinical protocols, the guardrails, the dosing regiments, and the provider training. In addition, in Menlo Park, in our API facility, where we have committed to actually manufacture the raw APIs in the U.S., which we think is extremely rare and likely the only company capable of delivering that, we are in the process of actually putting on BPC-157 on to stability and validation testing to be ready shortly and following course with the remainder. So in the meantime, as we await FDA decision-making and rulemaking, we will be moving forward with the wellness and peptide category with a broader set of offerings. These include things like semoralin, glutathione, NAD+, and other wellness therapies and injections, and we expect hopefully that to come out by the end of this year.

Great. Thanks, Andrew. The next question comes from Tom T., who asked about the investments we're making in AI and our longer-term vision for kind of what the Hems & Hers customer experience can look like. He asked, between labs, potential wearable partnerships, and the treatment and outcome data you're collecting from millions of customers, Is there a plan to bring all of that together so a customer can eventually see something like a real-time health score where the AI is connecting those data points, flagging things early, and recommending next steps before they become actual problems? How far away do you think something like that is, and is that something the team is actively building toward today?

Absolutely. The short answer to that question is yes. We are also hiring, so you're able to piece a lot of that together, so please apply. But the vision really is to be able to bring together all of the elements of a 360 person's health, whether that's wearable data, our own devices, external devices, lab testing data, our own labs, external labs, all the way to preventative screening and genetics to be able to have an ecosystem of doctors, specialists, coaches, agents, pharmacists on call for you 24-7. actively monitoring how best we can assist you with living the healthiest and best life. I think this sets up very well for a natural membership offering for HIMS & HERS that you could imagine coming out in the coming year or two. I think this also sets up a really powerful freemium offering for HIMS & HERS where patients could just have the opportunity to come leverage these tools at HIMS & HERS in a free manner to just get benefits of the 360 view of their health, a unified platform with an ecosystem all powered by AI on the bottom layer of actual doctors, actual trained nutritionists, as well as agents and care pilots. And so when you really step back, what this is that we're building is currently available. This is what most would consider concierge care today. And it costs anywhere from $50,000 to $150,000 We will now begin the question and answer session.

Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Maria Ripps with Canaccord. Your line is open. Please go ahead.

Great. Good afternoon and thanks so much for taking my questions. I wanted to ask about the NOBA partnership, which clearly has been very successful on the volume side. So now that the branded cohorts, a couple of quarters kind of in, a couple of quarters mature, How does the retention and engagement compare to what you saw historically across other products? And then how are you thinking about sort of deepening the NOVA relationship from here? Thank you so much.

Maybe, Yemi, I can speak a little bit about the relationship generally and opportunities, and then you can dive into the retention profiles. Maria, at a high level, we're extremely excited by the ongoing relationship with NOVA Nordisk. Top down from Mike as CEO, the team has been incredibly collaborative in thinking through ways in which we can broaden access to patients in the U.S. The Wagobe pill has had a staggering launch. I think we are the largest or one of the largest players that are helping people access that pill, which has really opened up the floodgates of people who had injection fears, price point fears, and concerns. And so very strong relationship domestically. We also have extremely strong relationships internationally and are adopting many of those relationships from our acquisition with the eucalyptus. So this is across Germany, across the UK, where we were actually able to help generate tens of thousands of individuals on a wait list for the Wagobe pill within just a couple of days in some of these markets as they were getting ready to prepare the launch. I think there's an increasing amount of collaboration around key strategic markets that are valuable to both businesses and thinking about how to collaborate into expanding the market and getting people more access. I think there's increasing ability to share data with regard to what's working for patients, adherence benefits, what we're seeing with regard to side effects or how to mitigate that and different dosing regimens. So I think there's a really powerful flywheel here when you start getting the leading drug manufacturers actually closer to the data on the ground of the consumers in a way that can not only help when it comes to commercializing therapies, but also thinking through how we bring new therapies to market. And so I think there's a growing set of opportunities that I think both of the teams are very excited by.

And then I hit the second part of your question, Maria. Really, I think we're seeing, you know, retention over their expectations. Part of the, the D&Q2 or a large part of the D&Q2 was a result of really the weight category amongst others being much stronger than we thought. As we, you know, saw that, that's what gave us conviction to elevate the guidance for the rest of the year. Perhaps what's even more exciting for us is that we see the experience continue to get better. From the prepared remarks we spoke around, you know, how with a more immersive experience through the next evolution of the app and some of the AI tools, as well as physical tools like the scale that consumers are getting, that enables more connectivity with their providers. And ultimately, we're already seeing signs of lower cancellation rates for the cohort of users that are receiving that. As we look to continue to invest in the experience and we see opportunities as we gain more efficiencies to make price points more affordable, we see an already solid retention rate getting stronger and stronger.

Your next question comes from the line of Ryan McDonald with Needham. Your line is open. Please go ahead.

Thanks for taking my questions. Congrats on a nice quarter. Andrew, as we think about as you're integrating eucalyptus now and the international acquisitions you've made, can you just talk about what some of the key specialty areas that you're seeing the most success with in those international markets and where you see the potential low-hanging fruit to expand assortment in some of those markets, particularly for eucalyptus that are already quite strong within the U.S. market? Thanks.

Yeah, great question, Ryan. You know, some of the specifically eucalyptus has done a wonderful job building real dominance in the UK, Australia and Germany and newly in Japan and Canada in the weight loss category. So they are serving that demographic very well. One of the leading, if not the leading providers in those markets and an aggregate, the leading digital health providers in those markets. Where we think there's real opportunity is actually bringing some of the core specialties that that the hims and hers business have gotten very good at here domestically overseas. And so these include things like testosterone replacement therapy, menopause therapy for women. This is basic assortment in the dermatology category, such as men's and women's hair, men's and women's sexual health and reproductive health. As well as categories like peptides in some of these markets where actually there are different regulatory opportunities to expand and allow patients to have some of these more cutting edge longevity therapies. And so I would say at a very high level, there's some very low hanging fruit in bringing some of the best and highest performing and even some of the fastest growing like testosterone categories that are here domestic into at least five or six markets overseas with the engine and the go-to-market commercial strategy that the Eucalyptus team is already well equipped to deliver on.

Appreciate that. And then as a follow-up, maybe just a clarifying point with on the peptides. I know you talked about, you know, addressed it a little bit in the question earlier and all the preparations going on there. But in terms of when you could, or I guess maybe the catalyst you're waiting for, Would you be waiting for sort of the full formal FDA guidance, you know, that's in the register that can take sort of the six to 12 month process to start selling the six of the seven or does a simply sort of the proposed rulemaking process kicking off with the commenting period, et cetera, sort of act as more of the signal, sort of a nearer term opportunity for you to start selling those six approved peptides? Thanks.

Yeah, thanks, Ryan, for the clarification. Our operating model today is that we are waiting on full and final rulemaking from the FDA. And so that could come in a lot of different forms and factors. It could come on different timelines. But we think it's really important for them to complete that process before we bring this to market.

Your next question comes from the line of Mark Mahaney with Evercore. Your line is open. Please go ahead.

Can I throw in two questions, please? Just on the eucalyptus contribution in the back half of the year, first to the EBITDA kind of shading down or cut in the full-year guidance. I know you mentioned investing in AI and in further international expansion, but is eucalyptus dilution part of that kind of shade down in the EBITDA growth for the full year? And then just on the U.S. acceleration that you saw in Q2 and you talked about, I think it's implied in your guidance for the back half of the year. I think that's largely due to the broadening of the weight loss offerings that you have. Would you want to help us quantify how much more acceleration we could expect in the back half of the year? Thank you very much.

Thanks for the question, Mark. We'll maybe take the second question in that it's effectively the catalyst behind the first. So we are expecting, you know, greater acceleration on both revenue and EBITDA in the U.S. in the back half of the year. Really, you know, one of the driving forces, you know, behind that are a few things. You know, the first is just given the switch, particularly on the branded products, to a monthly cadence, as you start to see more cohort stock, you know, due to greater tenure of the offering on the platform, that inherently results in both more revenue, you know, and EBITDA. We would expect those effects to start to compound in both Q3 as well as Q4. You already saw that to some degree with the roughly 12-point acceleration in the first quarter. I think to compound that as the experience gets better with some of the elements that Andrew mentioned as well as Mo mentioned in the prior remarks around the AI and some of the tools that subscribers will be equipped with, Inevitably, our view is that the ability for retention to get strong role increases, which will drive that acceleration further. Then I think what we're seeing is as we see efficiencies across the portfolio, both in the U.S. and particularly some of the early savings that we're receiving from AI, that will be reinvested into really two areas. The first is taking some of those savings and reinvesting it into a more immersive wait experience that passes more value to the consumers. That can be in the form of Making the price points more accessible can also be in the form of more tools and just thinking through how to increase the stickiness in the platform. The other area where we're prepared to invest, we see an ability to secure leadership across many areas. As we look at particularly attractive markets in Western Europe, like the UK, Germany, as well as Canada, Having the strength of the U.S. domestic portfolio to really lean in there is something that's reflected in our guidance. And our guidance is the flexibility to make price points more accessible here domestically, but also really to, as we see opportunities to invest in ways that adhere to our capital allocation standards of the one year or less breakeven period. We will do those particularly across international markets.

Your next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open. Please go ahead.

Yes, thank you. On the push to drive AI adoption, anything unique on the hers side in terms of starting there and then the rough timing of when you'd expect to see that on the him side as well?

Yeah, thanks, Craig, for the question. Yeah, we're incredibly excited by this, as we shared in the prepared remarks. I think seeing on the HER side meaningful acceleration in engagement. Patients are interacting and messaging with their care teams three times as much with the new care operating plan and operating system that we've rolled out. And at the same time, the actual tasks for humans has dropped And so this really rare combination of extreme engagement that we know has long-term trickle-down benefits when it comes to cancellation reductions and retention, as well as very real cost savings that, to Yemi's point, we can immediately redeploy into more aggressive pricing and market capture opportunities in the weight category as well as the international category. We started with the women's weight loss business because that is one of the highest engagement parts of the business. It's a category that there are a tremendous amount of questions. There's an incredible complexity with regard to injection fears, dosing regimens, side effect mitigation. It is probably the most complex category we operate in today. Building the operating system and kind of this AI platform that can connect a pharmacist, a doctor, care coaches, agents all together in that environment we thought was the best place to start. We are quickly rolling this out to other markets. We plan to bring, as we've shared, some of the other therapies and peptides to market that are currently already on the Category 1 list. as well as expanding the TRT offering with injection testosterone as well as oral testosterone. And the plan is to be able to have this new experience powered by AI for some of those new category launches on the HEMS side of the business as those come out in the next couple of quarters.

That's helpful. And then just a quick follow-up, Andrew, as you kind of step on the gas here with new product categories, you've talked about all the technology capabilities and AI as well as kind of the reach and capacity. How are you prioritizing these new categories? Is there anything in terms of like thresholds or things that you look at from a market perspective that kind of greenlights some of these new categories versus others that maybe you might ultimately take more time with to launch?

Yeah, it's a great question, Craig. You know, we're at a scale now with nearly 3 million subs globally where the patients do a fantastic job of telling us where the business needs and the clinical needs exist. And so really core to this strategy was the lab testing infrastructure that we acquired and have rolled out in the last few quarters. That will be bundled with a lot of these categories that we were just talking about and essentially free with your care. And what we've seen from that adoption is exactly where we need to be going. We're going towards metabolic health with broader sets assortment on the GLP-1 side. We're going towards hormonal health because we're seeing both on men and women massive overlap between those patient populations. We're going towards sleep and recovery and longevity focus because that's what people are telling our providers that they're interested in or struggling with. And so we're at this really powerful point in the flywheel where the scale of the business, the high engagements we have with patients on singular categories really feeds and accelerates our understanding of new categories, our understanding of the cross-cell potential of those categories, and ultimately what the overlap will be. and so I think over time that assortment and that breadth is a massive competitive advantage as we shared in the remarks you know with testosterone we're approaching six categories you know growing over 100 million run rate I think that assortment is going to continue to accelerate the pace at which we can bring new things to market and the pace at which they hit that 100 million run rate threshold just because they will be more informed by existing patient populations with with much more clear targeting and the ability to bridge patients to more comprehensive care.

Your next question comes from the line of Eric Percher with Nephron Research. Your line is open. Please go ahead.

Thank you. Andrew, I'd like to follow up on that comment about 3 million subs. I'd be interested to hear your perspective on the recent growth and how much of that may be a bolus that was waiting versus the ability to maintain it. And then, Yemi, I also want to check to see does that growth that we saw quarter over quarter include eucalyptus subs as well in a meaningful fashion?

Yeah, great question, Eric. I'll let Yemi speak to the eucalyptus contribution. I think a big part of this came from the pivot in the business to expand the offerings on the weight loss side to bring some of the new therapies onto the platform. There's obviously just a tremendous amount of demand for these therapies. And I think building the business model in such a manner that allows us to have very close and mutually beneficial relationships with the large drug companies and the large biotech companies It's going to continue to allow for this type of accelerated growth as new therapies come to market where consumers have excitement and there's great business potential. At the same time, I think there's been also a re-acceleration across categories. Most notably on the men's hormonal side of the business, within a couple of quarters has become the fastest growing business outside of weight loss and quickly we'll be eclipsing that 100 million threshold. And so we're continuing to lean in on that category, expand assortment in that category, bring that overseas. But generally, I think it's a nice combination of the business model, expanding great options on the metabolic side of the house, as well as the traditional core HIMSS businesses re-accelerating as we put more focus into some of these new initiatives.

Your next question.

Take the second part of your question, Eric. The short answer is eucalyptus, as well as revenue, is included in the second quarter results. On the revenue side is roughly $40 million coming from eucalyptus. Overall and material portion behind the guide is really just the accelerating domestic revenue. The assortment and the weight category definitely has been a catalyst towards Your next question comes from the line of Glenn Santangelo with Barclays.

Your line is open, please go ahead

Oh, yeah, thanks. Two quick ones for me. Hey, Yemi, I just want to follow up on Eric's eucalyptus question. In the past, you told us that eucalyptus was currently generating about a break-even margin. Is that still the case? And any help there you can give us? And then my follow-up is really around longer-term margins. If you look at your 3Q guide, the implied margins in the fourth quarter, I think you're calling for 12% EBITDA margins or 12% at the midpoint. Is that math correct? And is it reasonable to use that as sort of a jump-off point when we think about fiscal 27, appreciating that's still a few months away? And I appreciate you don't want to say much about fiscal 27, but I'm just trying to think about the margin trajectory given you're sort of confirming that 20% margin in 2030. Any sort of insights you can give us on how we should think about that would be helpful. Thanks.

Yeah, thanks for the question, Glenn. To hit the first part of your question, you know, for, you know, eucalyptus, you know, I think that roughly, you know, they were running at breakeven to moderate losses. I think as we see continued strength in the US, you know, the international markets are something that we're prepared to lean into in a thoughtful way. Collectively, we do expect those to be even near or at breakeven. But as opportunities permit, I think that's one of the beautiful things about the domestic and the best domestic acceleration that we're seeing that provides the opportunity to invest there. On your second question around just the longer term margin profile, not necessarily prepared to speak to 2027 yet, but we'll really just kind of reorient towards what does our philosophy look like for the next couple of quarters as we continue to lean in and invest. and really that's towards, you know, eye towards, you know, first and foremost strong free cash flow generation as well as strong EBITDA dollar, you know, generation on an aggregate basis. And so as you see that the stacking of the cohorts, particularly in the weight loss category that we spoke around before, as well as some of the benefits coming from, you know, the rampant newer specialties that Andrew mentioned, those things give us, you know, conviction to be able to invest aggressively but still drive the strong cash flow generation in EBITDA dollars.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.