- The US Federal Trade Commission (FTC) is investigating Hims & Hers Health, Inc. over alleged obstacles to subscription cancellations, potentially breaching consumer protection standards.
- Subscription revenue forms the backbone of Hims & Hers’ business model, with possible regulatory changes jeopardising customer retention and predictable earnings.
- Hims & Hers recorded 73% year-over-year revenue growth in Q2 2025, reaching $544.8 million, though FTC scrutiny introduces potential downside risk.
- Competitors in the telehealth industry face similar challenges, with growing pressure for transparent cancellation processes and customer trust restoration.
- Future outcomes hinge on regulatory resolution, with favourable results potentially supporting continued growth, while adverse findings may impact valuation significantly.
The US Federal Trade Commission (FTC) has launched an inquiry into Hims & Hers Health, Inc., focusing on allegations that the telehealth company has imposed barriers to subscription cancellations, potentially violating consumer protection standards. This development underscores broader regulatory scrutiny on subscription-based business models in the digital health sector, where ease of exit is increasingly viewed as a cornerstone of fair practice. As Hims & Hers cooperates with the probe, investors are weighing the implications for the firm’s growth trajectory amid a competitive landscape dominated by recurring revenue streams.
Regulatory Spotlight on Subscription Practices
In an era where subscription services form the backbone of many consumer-facing businesses, the FTC’s investigation into Hims & Hers highlights a growing intolerance for practices that complicate cancellations. Reports indicate that the inquiry stems from customer complaints about persistent charges post-cancellation attempts, echoing issues seen across industries from streaming platforms to fitness apps. For Hims & Hers, a company that relies heavily on auto-renewing subscriptions for its telemedicine offerings—including treatments for hair loss, sexual health, and weight management—this scrutiny could prompt operational changes that affect customer retention and revenue predictability.
Historical context reveals that such probes are not isolated. The FTC has previously targeted companies for “dark patterns” in user interfaces, where design choices deliberately hinder straightforward cancellations. For instance, in 2023, the agency proposed rules mandating clearer opt-out mechanisms, aiming to curb what it deems deceptive practices. Hims & Hers, with its subscription model accounting for a significant portion of its income, now faces the challenge of demonstrating compliance without disrupting its user base. The company’s public stance of full cooperation suggests a proactive approach, potentially mitigating reputational damage, but the outcome remains uncertain.
Impact on Business Model and Financials
Hims & Hers Health operates a platform that connects users with medical professionals for virtual consultations and prescription fulfilments, often bundled into subscription plans. According to its SEC filings from 2022, most offerings are sold on a recurring basis, with cadences ranging from monthly to annually, providing the firm with a stable revenue stream. This model has fuelled impressive growth; in its latest reported quarter ending June 2025, revenue surged 73% year-over-year to $544.8 million, driven by expansions in weight-loss treatments and personalised care.
However, the FTC inquiry introduces risks to this foundation. If findings lead to mandated changes—such as simplified cancellation processes or refunds for disputed charges—it could increase churn rates. Analyst models, including those from firms like Allen Lutz at Bank of America, project that even minor adjustments to retention metrics might shave 5–10% off forward earnings estimates. Currently, Hims & Hers trades at a forward P/E ratio of 102.46 based on expected EPS of $0.46, reflecting high growth expectations but also vulnerability to regulatory headwinds.
Live market data as of 14 August 2025 shows HIMS shares closing at $47.13 on the NYSE, down $1.20 or 2.48% from the previous close of $48.33. The stock traded in a day range of $45.28 to $47.80, with volume reaching 19,967,208 shares—below the 10-day average of 38,595,100 but indicative of heightened investor attention. Over the past 52 weeks, the shares have ranged from $13.47 to $72.98, marking a 207.64% increase from the low, though currently 35.4% below the high. This volatility underscores market sensitivity to news flow, particularly in a sector where regulatory compliance can make or break valuations.
Broader Industry Implications
The investigation into Hims & Hers is emblematic of wider challenges in the telehealth industry, which boomed during the pandemic but now grapples with maturing regulations. Competitors like Teladoc Health and Ro have faced similar customer service critiques, with complaints logged on platforms such as the Better Business Bureau highlighting auto-renewal pitfalls. A class action investigation by law firm Ahdoot & Wolfson, announced in April 2024, probed Hims & Hers specifically for continuing charges after cancellations, amplifying the FTC’s focus.
Investor sentiment, as gauged by credible sources like TipRanks, rates HIMS at a “Hold” with an average score of 2.8, reflecting caution amid these developments. Analysts from Bloomberg and Yahoo Finance have noted that while the company’s cooperation could lead to a swift resolution, prolonged scrutiny might erode brand trust. In a dryly humorous twist, one might say that in the subscription economy, the real weight-loss challenge isn’t the GLP-1 drugs Hims promotes, but shedding unwanted recurring fees.
Looking ahead, forecasts from analyst-led models suggest that if the inquiry resolves favourably, Hims & Hers could resume its growth path, with projected EPS for the current year at $1.07 and a price-to-book ratio of 18.91 supporting a market cap of $10.65 billion. However, adverse outcomes could pressure shares towards the 200-day moving average of $39.60, a 16% downside from current levels. The firm’s recent board appointment of an industry veteran with regulatory experience, as highlighted in July 2024 analyses, may bolster its defence strategy.
Strategic Responses and Opportunities
To navigate this, Hims & Hers might enhance its cancellation protocols, perhaps integrating AI-driven support for seamless opt-outs, aligning with FTC guidelines. This could not only appease regulators but also improve customer satisfaction, potentially reducing long-term churn. The company’s diversification into areas like dermatology—despite recent streamlining of its Apostrophe brand in March 2025—positions it to weather the storm.
Comparatively, Amazon’s expansion into subscription telehealth in November 2024 triggered a 30% drop in HIMS shares, illustrating competitive pressures. Yet, analysts argue this was an overreaction, given Hims’ niche in personalised, stigma-free care. With shares up 19.01% over the 200-day average, the market appears to price in resilience, provided regulatory hurdles are cleared.
Investor Considerations
For investors, the FTC probe serves as a reminder to scrutinise subscription metrics in due diligence. Key indicators include customer acquisition costs versus lifetime value, where any uptick in cancellations could inflate the former. While Hims & Hers boasts a trailing twelve-month EPS of $0.79 and a book value of $2.49, sustaining growth will hinge on transparent practices.
In summary, the inquiry presents a pivotal test for Hims & Hers, balancing regulatory compliance with business innovation. A resolution that reinforces consumer protections without crippling operations could emerge as a net positive, fostering a more robust telehealth ecosystem.
References
- Ahdoot & Wolfson. (2024). Hims & Hers Health Auto-Renewal and Cancellation Practices: Class Action & Mass Arbitration Investigation. Retrieved from https://www.ahdootwolfson.com/blog/hims-hers-health-auto-renewal-and-cancellation-practices-class-action-mass-arbitration-investigation/
- AInvest. (2024). Hims Health Faces Investigation: Allegedly Misleading Statements. Retrieved from https://www.ainvest.com/news/hims-health-faces-investigation-allegedly-misleading-statements-2507/
- Better Business Bureau. (2024). Hims & Hers Inc. Complaints. Retrieved from https://www.bbb.org/us/ca/san-francisco/profile/health-and-medical-products/hims-hers-inc-1116-880029/complaints
- BNN Bloomberg. (2024, July 19). Hims & Hers Says Voluntarily Cooperating with FTC Inquiry. Retrieved from https://www.bnnbloomberg.ca/business/company-news/2024/07/19/hims-hers-says-voluntarily-cooperating-with-ftc-inquiry/
- Bloomberg. (2024, July 19). Hims & Hers Says Voluntarily Cooperating with FTC Inquiry. Retrieved from https://www.bloomberg.com/news/articles/2024-07-19/hims-hers-says-voluntarily-cooperating-with-ftc-inquiry
- Finance Yahoo. (2024). Hims & Hers Says Voluntarily Cooperating. Retrieved from https://finance.yahoo.com/news/hims-hers-says-voluntarily-cooperating-194101710.html
- Markets Insider. (2024). Hims & Hers Health: A Strong Buy Amidst FTC Inquiry. Retrieved from https://markets.businessinsider.com/news/stocks/hims-hers-health-a-strong-buy-amidst-ftc-inquiry-enhanced-by-strategic-board-appointment-and-brand-equity-1033582081
- SEC. (2022). Hims & Hers Health Inc. Form 10-K. Retrieved from https://www.sec.gov/Archives/edgar/data/1773751/000177375123000029/hims-20221231.htm
- TipRanks. (2024). Hims & Hers Lower After Capitol Forum Uncovers FTC Investigation. Retrieved from https://www.tipranks.com/news/the-fly/hims-hers-lower-after-capitol-forum-uncovers-ftc-investigation
- Intercom. (2024). How to Cancel Hims Subscription. Retrieved from https://intercom.help/cancellation-474c38d583db/en/articles/11871969-how-to-cancel-hims-subscription
