Hims & Hers Health (NYSE: HIMS) saw its stock nosedive 18% Thursday after federal regulators declared an end to Novo Nordisk’s weight-loss drug shortages, upending the telehealth sector’s $2 billion compounded medication market overnight. The selloff erased $2.6 billion in market value despite shares having surged 43% earlier this week on acquisition news.
The FDA confirmed Wednesday that Novo Nordisk can now fully supply its blockbuster drugs Ozempic and Wegovy nationwide, revoking emergency compounding privileges granted during pandemic-era shortages. This immediately prohibits U.S. pharmacies from producing cheaper copycat versions of semaglutide-based treatments – a core revenue stream for Hims & Hers since 2022.
Strategic Pivot Underway: While losing compounding rights deals a short-term blow, Hims & Hers is aggressively diversifying:
- Acquired Trybe Labs (at-home diagnostics) on 2/20
- Purchased California peptide facility on 2/21 for metabolic therapies
- Insider sold $251K in shares pre-drop
The company now controls three FDA-compliant manufacturing sites, positioning it to develop proprietary formulations rather than rely on generics. Analysts note this vertical integration could offset compounded drug losses through premium-priced personalized medications targeting:
| Market | Projected Value |
|---|---|
| Preventive Health | $107B by 2026 |
| Cognitive Enhancement | $15B by 2027 |
| Metabolic Optimization | Undisclosed |
“This isn’t just damage control – it’s chess while others play checkers,” said BTIG analyst Dr. Jessica Lin. “Hims owns the patient interface layer and now critical infrastructure for next-gen treatments.”
Street Sentiment Divided: Wall Street remains cautious with Citigroup downgrading to “sell” this month, while Needham raised its target price to $31 citing telehealth’s 22% annual growth rate. The stock’s wild swings (52-week range: $9.22-$72.98) reflect broader uncertainty about pandemic-era health tech valuations.
