Shares of Hims & Hers Health showed tentative stability in premarket trading Wednesday, rising 0.1% to $17.25. This minor uptick follows two consecutive sessions of significant losses, with the stock dropping 10.8% on Tuesday and 16% on Monday.
Legal Challenge Over Compounded Drugs
The sell-off was triggered by a patent infringement lawsuit filed by pharmaceutical giant Novo Nordisk against Hims & Hers. The case centers on compounded versions of the weight-loss medication semaglutide, the active ingredient in Novo's branded drug Wegovy. This legal action intensifies regulatory scrutiny around pharmacy-compounded GLP-1 agonists, which are typically permitted during drug shortages or for individualized patient needs.
Novo Nordisk's general counsel characterized the compounding market as "the wild west," while Hims & Hers defended the practice as a legal and vital component of pharmacy care, arguing it allows for personalized dosing when branded versions are unavailable. The dispute escalated after U.S. regulators determined that semaglutide is no longer in short supply.
Growth Trajectory Meets Legal Hurdle
The lawsuit arrives as Hims & Hers has been experiencing rapid expansion. The company previously projected 2025 revenue to exceed $2.3 billion, with an ambitious target of $6.5 billion by 2030. Its growth has been partly fueled by offering more accessible weight-loss treatments through telehealth and compounding channels, putting pressure on established players like Novo Nordisk and Eli Lilly.
Investors are now assessing the potential risks, including possible court injunctions, financial damages, or stricter regulatory limits on compounded drugs. A ruling against Hims & Hers could disrupt a key product line that has been attracting new customers, potentially forcing the company to seek costlier alternatives to maintain growth.
What Comes Next
Market participants are focused on several near-term catalysts. These include any preliminary court rulings in the Novo Nordisk case, further guidance from the Food and Drug Administration regarding enforcement, and the company's upcoming financial report. Hims & Hers is scheduled to release its fourth-quarter and full-year 2025 results after the market closes on February 23, followed by a conference call at 5 p.m. ET.
The earnings call will be closely watched for management's commentary on demand for weight-loss products and the potential impact of the legal and regulatory challenges on its business mix and future strategy.
