Hims & Hers Health has announced it may need to stop selling compounded versions of Novo Nordisk's weight-loss drug following the FDA's declaration that the Wegovy shortage has ended. The telehealth provider's stock dropped 19.4% to $41.41 in after-hours trading on Monday as investors reacted to the news.
In a regulatory filing, the company acknowledged the uncertain future of its compounded GLP-1 offerings: While it believes there are paths to continue offering access to certain compounded GLP-1s after the shortage ends, it cannot “guarantee that we will be able to continue offering these products in the same manner, to the same extent, or at all."
The FDA's Friday announcement removed Wegovy from its shortage list, giving compounding pharmacies a 60-90 day window to discontinue production of copies of Novo Nordisk's patented medication. This development directly impacts Hims & Hers' business model, which had benefited from selling these compounded versions at significantly lower prices than the branded Wegovy.
According to Leerink Partners analyst Michael Cherny, the company had been preparing for this eventuality: "It is now critical to understand its legal pathway to selling personalized doses since it has to be the primary mechanism to sell semaglutide going forward."
The company also warned investors that even if it can continue offering compounded versions, prices may "increase significantly," potentially causing customer cancellations and decreased demand.
In response to the FDA's decision, some drug compounders have taken legal action, filing a lawsuit that claims the agency's determination regarding the end of the semaglutide shortage was "arbitrary and capricious."
The situation highlights a broader healthcare access issue, as many Americans unable to afford Wegovy—which has demonstrated weight loss of up to 15% on average—have turned to compounded alternatives through telehealth providers like Hims & Hers and WeightWatchers. While these compounded versions aren't FDA-approved, they are subject to some regulatory oversight.
Despite these challenges, Hims & Hers reported strong financial performance for the fourth quarter, with revenue of $481.1 million exceeding analyst expectations of $470.3 million according to LSEG data.
The company now faces a critical strategic decision as it navigates the changing regulatory landscape for weight-loss medications.
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