- Hims & Hers stock fell 27% as it plans to stop selling compounded weight loss drugs.
- The FDA removed semaglutide from its shortage list, affecting Hims & Hers’ sales strategy.
- Hims & Hers’ revenue grew 69% in 2024, with GLP-1 drugs representing about 20% of its sales.
The move: Hims & Hers stock plunged as much as 27% on Tuesday, hitting an intraday low of $37.29. The stock is down 49% since it peaked at $72.98 last week.
The chart:
Why: Hims & Hers said the company would soon stop selling compounded versions of popular GLP-1 weight loss drugs.
"We will remove all commercially-available doses" of semaglutide, CFO Yemi Okupe said after the company released its fourth-quarter earnings on Monday.
The decision comes after the FDA officially removed semaglutide, the active ingredient in Ozempic, from its shortage list last week.
The FDA allows the sale of compounded versions of drugs on its shortage list to limit patient supply issues. In 2022, the FDA placed Ozempic and other GLP-1s on the shortage list, opening the door for Hims & Hers to sell copycat versions of the drug.
What it means: Hims & Hers saw its business boom over the past year thanks to its weight loss drug sales.
Revenue surged 69% to $1.48 billion in 2024, with its compounded GLP-1 weight loss drugs making up about 15% of those sales. That boom in business translated into a booming stock price, with its shares more than tripling since November.
But with the company's main source of growth set to be extinguished, its unclear how it can sustain its lofty valuation, with the stock trading at a price-to-earnings ratio of about 87x.
Emphasizing the stiff competition in the market for obesity drugs, Eli Lilly, which sells its own GLP-1 drugs, announced on Tuesday that it would lower the price for its weight loss drugs in vial form for patients who are paying out of pocket rather than using insurance.
The pharmaceutical giant is going after Hims & Hers customer base.
What the pros are saying: Citi said it estimates obesity drugs accounted for over $130 million of revenue in the fourth quarter, with very little growth for the company outside GLP-1 drugs.
"Now that semaglutide is off shortage, we think revenue guidance (56-63% y/y growth) is aspirational as it assumes $725M of revenue from weight loss products," analysts at Citi said.