Hims & Hers Health Inc. shares plummeted 7.08% in after-hours trading on Monday, erasing earlier gains after the telehealth company reported a surprisingly wide second-quarter loss that overshadowed an upbeat revenue beat and raised full-year revenue guidance.

The company swung to a net loss of $86.3 million, or $0.37 per share, from a profit of $0.17 per share a year earlier. That result dramatically missed the consensus analyst estimate of a loss of just $0.01 to $0.05 per share. While revenue climbed 38% to $753.2 million and topped the $699.9 million forecast, the cost of revenue more than doubled to $272.4 million, slicing the gross margin to 64% from 76% a year ago. Total operating expenses surged 48%, driven by rising product mix changes, fulfillment scaling, and integration costs tied to international expansion.

The bottom line was further pressured by a $47.5 million non-recurring legal contingency charge and restructuring costs linked to the company’s strategic pivot from compounded GLP-1 weight-loss drugs to branded FDA-approved treatments like Novo Nordisk’s Wegovy. The transition followed the FDA’s move to restrict copycat weight-loss drugs and a patent settlement with Novo Nordisk. Management acknowledged the margin hit but sought to reassure investors by raising the full-year revenue outlook to $3.1 billion to $3.3 billion and reiterating its 2030 revenue target of at least $6.5 billion. Nonetheless, the depth of the earnings miss and the margin erosion fueled a sharp sell-off in the stock.