Doctor, doctor, give me the news, Hims & Hers Health (HIMS) has got bad case of the stock market blues.
The San Francisco telehealth company could’ve used some strong medicine on March 6 when its shares took sick amid a court ruling and stepped up competition involving weight-loss drugs.
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First, here’s the background:
The Food and Drug Administration two years ago had said that Eli Lilly’s (LLY) weight-loss drugs, Mounjaro and Zepbound, were in short supply, Reuters reported. (Demand for weight-loss drugs has been astronomical.) The key ingredient in those drugs is called tirzepatide.
According to federal law, the declaration of the shortage enabled compounders — pharmacists and physicians licensed to mix the ingredients of a drug — to produce custom versions of the Lilly drugs.
In October 2024, however, the FDA declared that the Lilly drugs were no longer in short supply, requiring compounders to stop producing them in commercial amounts.
The Outsourcing Facilities Association, which represents facilities registered under the FDA’s rules for compounding medications, then sued to block that FDA declaration.
Judge Mark Pittman of U.S. District Court for the Northern District of Texas has now ruled in favor of the FDA. He denied the OFA’s request for a preliminary injunction that would stop the agency from declaring that the drugs were no longer in shortage.
Reuters reported that the court decision was sealed and unavailable for review by the news service and the trade group.
Hims & Hers provides prescription medications, over-the-counter medications, and personal care products.
Hims & Hers Health
Hims & Hers Health shares hurt by court ruling
Hims & Hers has never sold compounded tirzepatide. But last May, Hims & Hers Health started prescribing compounded semaglutide, the active ingredient in Novo Nordisk’s (NVO) GLP-1 medications Ozempic and Wegovy, which are approved to treat diabetes and weight loss, respectively.
Semaglutide injection products also had been in short supply since 2022 due to increased demand, but the FDA in February 2025 determined that that shortage had also been resolved, which meant compounders had to stop producing them.
Analysts expect a pending court case involving semaglutide will also end in favor of the FDA.
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Hims & Hers said the GLP-1 offering generated more than $225 million in revenue in 2024.
The company’s shares have fallen more than 46% since semaglutide was taken off the shortage list. They closed off 16% at $34.39 in regular New York Stock Exchange trading March 6.
Meanwhile, Novo Nordisk on March 5 launched an online pharmacy called NovoCare Pharmacy, a direct-to-consumer, cash-pay-only service.
Patients can order all doses of the weight-loss drug Wegovy for $499 per month, a 63% discount from the list price of $1,349 for a 28-day supply.
Analysts: Texas case a bad portent for compounders
Citi analysts say the Texas federal court ruling is very likely to end the bulk compounding of tirzepatide and has direct read-through to the pending semaglutide case, which it also expects will go in the FDA’s favor.
The investment firm said shares of Hims & Hers would trade down on the news given the semaglutide read-through.
Citi has a sell rating on HIMS shares with a $27 price target.
Citi said that Novo Nordisk’s NovoCare Pharmacy is similar to Eli Lilly’s LillyDirect offering, which provides access to tirzepatide vials to cash-paying customers at discount.
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Bank of America Securities called the decision “a direct negative” for compounding pharmacies of tirzepatide “if the order stands” and an “indirect negative” for Hims & Hers.
The investment firm said that while Hims & Hers does not compound tirzepatide, if a similar decision is applied to Novo’s semaglutide, compounding pharmacies would be unable to produce the drug after a grace period ends in May.
B of A reiterated an underperform rating and $21 price target on Hims & Hers Health shares.
HIMS has said it will shift to selling less-effective weight-loss drugs that it is allowed to sell without personalization.
These include liraglutide, an older GLP-1 weight-loss drug the company will add to its portfolio later this year, and “oral medication kits” made up of medication and supplements that can help with weight loss.
On Feb. 24, Hims & Hers Health beat Wall Street’s fourth-quarter earnings and revenue expectations, but its shares tumbled on disappointing gross margin.
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