Shares of Hims & Hers Health (NYSE: HIMS) plunged 23% on Friday after the U.S. Food and Drug Administration (FDA) announced that the shortage of Novo Nordisk (NYSE: NVO) weight-loss drug has officially ended. This regulatory update spells trouble for telehealth companies like Hims & Hers, which have relied on selling cheaper, compounded versions of the drug to drive business.
The FDA’s statement made it clear that Novo Nordisk can now meet the nationwide demand for its popular medications, Ozempic and Wegovy, used for weight loss and diabetes management. Back when the shortage hit, compounding pharmacies stepped in to help. Since 2022, they’ve been allowed to produce exact copies of these brand-name drugs, which telehealth platforms like Hims & Hers then offered at lower prices to attract customers. Now that the shortage is over, the FDA has revoked that permission, barring pharmacies from making identical versions of Ozempic and Wegovy.
Compounding pharmacies aren’t completely out of options. They can still create alternative formulations by adjusting the dosages or mixing in different ingredients. However, this shift poses a significant challenge to companies like Hims & Hers, which built a chunk of their business around providing these compounded drugs during the shortage. Losing the ability to sell exact replicas could shrink their market share and profits.
Before this news broke, Hims & Hers Health (NYSE: HIMS) was on a hot streak. The company’s stock had climbed 43% over the previous five days, fueled by investor enthusiasm. Friday’s steep decline wiped out much of those gains, as investors quickly adapted to the FDA’s announcement and the challenges it presents for Hims & Hers’ product lineup. Investors now closely monitor how the telehealth provider will respond to this setback in a fiercely competitive industry.
