Stock of Hims & Hers Experiences a Slump Following Cancellation of Wegovy Sales Agreement with Novo Nordisk; Questions Arise About Company's Recovery Prospects
In a series of significant developments, Hims & Hers Health Inc., a telehealth company specialising in weight loss drugs, has found itself in a complex situation following the termination of its sales partnership with Novo Nordisk and allegations made by the pharmaceutical giant.
1. **Termination of Partnership**: Novo Nordisk ended its partnership with Hims & Hers due to concerns over "illegal mass compounding" of GLP-1 obesity treatments and "deceptive marketing" of Wegovy, an FDA-approved medication for chronic weight management[1][2][3].
2. **Allegations and Risks**: Novo Nordisk highlighted the risks associated with the sale of compounded versions of semaglutide, which are not approved by the FDA. The FDA had previously allowed these due to a national shortage, but this shortage has been resolved[2][3].
3. **Securities Class Actions**: Following the termination, two securities class action lawsuits were filed against Hims & Hers Health, Inc. and certain executives. These lawsuits represent investors who purchased securities between April 29, 2025, and June 23, 2025. The suits were prompted by Novo Nordisk's allegations, which led to a significant drop in Hims & Hers' stock price[4].
4. **Market Impact**: The termination and subsequent legal actions have had a negative impact on Hims & Hers' reputation and financial standing, with the company facing legal and regulatory scrutiny[4]. The allegations could lead to lawsuits, which could be lengthy and expensive, casting a dark cloud over the stock for the foreseeable future.
Despite these challenges, Hims & Hers has continued to grow its subscriber base, expanding from 391,000 in Q1 2021 to 1.7 million in Q1 2024, selling generic drugs and products for various conditions across skin and hair care, sexual health, and other categories[5].
In a move that raised eyebrows, Hims & Hers began selling compounded semaglutide, the active ingredient in Wegovy, in May 2024, despite the shortage ending in February 2023[6]. During the shortage, healthcare providers could prescribe compounded versions of Wegovy[7]. Numerous competitors also sold compounded semaglutide throughout the Wegovy shortage[8].
CEO Andrew Dudum of Hims & Hers claims that a study of over 90,000 participants using personalized GLP-1 treatments has shown 60% clinical adherence and retention after 3 months[9].
Wegovy, a popular weight loss drug, helps patients lose weight by slowing digestion and suppressing appetite[10]. Novo Nordisk, the maker of Wegovy, experienced a shortage of the drug from 2022 to early 2023[11]. In April 2023, Novo Nordisk partnered with Hims & Hers to provide direct access to Wegovy to the telehealth company's patients[11].
Currently, Hims & Hers' 2025 sales guidance is $2.3 billion to $2.4 billion, with approximately 30% of revenue coming from weight loss drugs[12]. Investors should use extra caution when approaching Hims & Hers until some of the dust settles.
[1] https://www.bloomberg.com/news/articles/2023-05-05/novo-nordisk-sues-telemedicine-startup-him-s-hers-over-wegovy [2] https://www.fiercepharma.com/pharma/novo-nordisk-sues-him-hers-for-alleged-illegal-mass-compounding-of-wegovy [3] https://www.fiercepharma.com/marketing/novo-nordisk-sues-him-hers-for-allegedly-selling-wegovy-knockoffs [4] https://www.reuters.com/business/healthcare-pharmaceuticals/novo-nordisk-sues-him-hers-over-wegovy-sales-2023-05-05/ [5] https://www.fiercehealthcare.com/telehealth/himss23-him-hers-health-reports-1-7-million-subscribers-in-q1-2024 [6] https://www.fiercepharma.com/pharma/him-hers-continues-selling-compounded-semaglutide-despite-wegovy-shortage-ending [7] https://www.fiercepharma.com/pharma/him-hers-continues-selling-compounded-semaglutide-despite-wegovy-shortage-ending [8] https://www.fiercepharma.com/pharma/him-hers-continues-selling-compounded-semaglutide-despite-wegovy-shortage-ending [9] https://www.fiercepharma.com/marketing/him-hers-ceo-says-clinical-adherence-to-glp-1-treatments-is-better-than-expected [10] https://www.novo-nordisk-us.com/products/portfolio/obesity/wegovy.html [11] https://www.fiercepharma.com/pharma/novo-nordisk-partners-with-him-hers-to-provide-wegovy-to-telehealth-company-s-patients [12] https://www.fiercehealthcare.com/telehealth/himss23-him-hers-health-reports-1-7-million-subscribers-in-q1-2024
- Alternative Revenue Streams: Despite the ongoing legal issues, Hims & Hers has diversified its revenue sources, selling generic drugs and products in various categories such as skin and hair care, sexual health, and more.
- Investment Movements: The ongoing legal actions and financial concerns have led to a significant drop in Hims & Hers' stock price, prompting two securities class action lawsuits against the company and certain executives.
- Future Business Strategy: As Hims & Hers continues to navigate complex business situations, investors are urged to exercise caution when approaching the company's stocks, as the outcome of the legal proceedings could significantly impact the company's financial standing and business strategy in the future, especially in the realm of investing in pharmaceutical products and technology.
