Shares of Hims & Hers Health experienced a sharp decline of approximately 16% in after-hours trading on Monday, falling to $19.33. The sell-off was triggered by the company's decision to withdraw its $49 compounded semaglutide weight-loss pill and the filing of a patent lawsuit by pharmaceutical giant Novo Nordisk. During the session, the stock briefly touched a low of $16.44 before paring some losses.
Regulatory and Legal Pressure Mounts
The development coincides with increased regulatory scrutiny on compounded GLP-1 medications in the United States. The Food and Drug Administration has warned companies against marketing these pharmacy-made versions as equivalent to approved generics, threatening legal action for unsubstantiated claims. Novo Nordisk is seeking a court order to halt sales of what it alleges are infringing compounded drugs, with its general counsel describing the situation as a "tipping point." Some industry observers view the legal action as a direct challenge to the compounder market.
Analyst Downgrade and Financial Implications
Investment firm Leerink Partners responded to the uncertainty by lowering its price target on Hims & Hers from $24 to $20, while maintaining a Market Perform rating. The firm expressed concerns over the ongoing legal challenges surrounding compounded semaglutide products and questioned the sustainability of these sales. This is significant as Leerink estimates weight-loss offerings could contribute roughly $800 million to next year's revenue, representing 25% to 30% of the company's projected EBITDA.
In a weekend statement, Hims & Hers confirmed the pill's removal, affirming its commitment to providing "safe, affordable, and personalized care" to patients. The company did not specify whether its compounded injectable weight-loss treatments would face similar adjustments.
Market Reaction and Forward Outlook
The news prompted divergent moves among major drugmakers. Novo Nordisk shares advanced 3.6% to $49.37, while Eli Lilly stock retreated 1.3% to $1,044.67. The immediate focus for investors now shifts to the initial court filings, which may outline the dispute's timeline, and potential further regulatory actions. Hims & Hers is scheduled to report its fourth-quarter and full-year 2025 financial results after the market closes on February 23, with a conference call to follow.
