Hims & Hers has drawn scrutiny for selling compounded GLP-1 treatments – lower-cost, unapproved alternatives to blockbuster weight-loss drugs made by Eli Lilly and Novo Nordisk.
- Hims & Hers' stock has declined nearly 40% in the current quarter, denting earlier gains.
- The telehealth company lost a crucial partnership with Novo Nordisk and faced regulatory scrutiny for continuing to sell compounded GLP-1 treatments.
- The majority of the analysts, however, recommend ‘Hold’ while retail investor confidence has been slipping.
Hims & Hers emerged as one of the market’s most closely watched stocks this year, fueled by rapid growth and its rising profile in the distribution of GLP-1 weight-loss drugs. However, a scrapped partnership with Novo Nordisk and changing regulatory dynamics dulled that momentum as the year neared its end.
The telehealth company’s stock has dropped about 38% in the current quarter, denting earlier gains, and Stocktwits sentiment has trended chiefly in the ‘neutral’ and ‘bearish’ zones during this period.
Compounded GLP-1 Issue
Hims & Hers has drawn scrutiny for selling compounded GLP-1 treatments – lower-cost, unapproved alternatives to blockbuster weight-loss drugs made by Eli Lilly and Novo Nordisk. Such compounded medicines are typically allowed to be produced at scale only during shortages of branded versions, and the industry has grown rapidly in the last few years.
At the start of the year, the U.S. Food and Drug Administration announced that ongoing supply issues had been resolved. Still, some telehealth companies, including Hims & Hers, continued to offer the compounded medications. The company later struck a deal with Novo Nordisk to resell its blockbuster weight-loss drug Wegovy to telehealth patients. That partnership lasted just three months, ending in July after Novo Nordisk pulled out, alleging the company failed to comply with laws that prohibit the mass sale of compounded drugs.
As Hims & Hers continued to market its compounded GLP-1 offerings – often describing them as “personalized” – lawmakers introduced a bill earlier this month that would tighten the standards for when such copycat versions can be legally dispensed.
Growth Slows
Owing to headwinds in its fast-growing category, the company's overall growth has slowed.
Hims & Hers missed revenue estimates for the first time in two years last quarter, as it stopped selling Wegovy. However, the company said it is in active talks with Novo Nordisk to offer Wegovy injections and an oral version through its platform, and reiterated its target of $725 million in GLP-1 revenue next year.
On the upside, Hims & Hers has accelerated its global expansion: it acquired European telehealth platform Zava, and plans to enter new markets such as Canada, while also diversifying into new health specialties beyond its core sexual health and dermatology offerings.
Management has set long-term targets of at least $6.5 billion in revenue and $1.3 billion in adjusted EBITDA by 2030, underscoring confidence in continued growth.
Analysts, however, are in a wait-and-watch mode. Eight of the 14 brokerages covering the stock recommend ‘Hold, and three recommend ‘Buy’ or higher and ‘Sell’ or lower. The average price target of $44.67 implies an upside of 28% from the last close.
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