Hims & Hers shares plunge as looming curbs on drug compounding cloud forecast

By Christy Santhosh

(Reuters) -Hims & Hers Health shares were headed for their biggest single-day plunge as Wall Street analysts questioned the telehealth provider’s lofty sales forecast on Tuesday amid looming restrictions on compounded weight-loss drugs.

Telehealth providers like Hims & Hers, which benefited from selling cheaper copies of Novo Nordisk’s weight loss drug Wegovy last year, are now expected to struggle after the original versions were removed from the shortage list on Friday.

Shares of Hims & Hers fell more than 27% to $37.34 in morning trading after the company said on Monday it cannot guarantee that it will “be able to continue offering these products in the same manner, to the same extent, or at all”. The stock had more than doubled last year.

However, it forecast sales of $725 million from its weight-loss business in 2025, and said it expected to keep offering “personalized” compounded drugs and generic versions of an older Novo Nordisk drug.

“We are less sanguine,” said Citi analyst Daniel Grosslight, noting that the forecast assumed the company’s other weight loss options would see a rapid acceleration in sales.

Separately on Monday, drug compounders sued the Food and Drug Administration over its decision to remove Novo’s drugs from its shortage list, a lawsuit similar to the one filed against the agency over its removal of Eli Lilly’s drug.

“The reality in the market is the medication remains in short supply, as we see in continuing shortage reports from our members for the low doses,” said Geoff Cook, CEO of Noom, another telehealth company that sells compounded versions of Novo’s drug.

The company’s stock had lost a quarter of its value on Friday after Wegovy was removed from the shortage list.

The stock is trading at 1.92 times the estimate for the company’s earnings for the next 12 months, according to data compiled by LSEG. This compares to a ratio of 0.72 for GoodRx Holdings and 2.69 for Doximity.

(Reporting by Christy Santhosh in Bengaluru; Editing by Leroy Leo)