Key Stats for HIMS Stock
- 1- Year Price change for HIMS stock: -57%
- $HIMS Share Price as of Feb. 9: $19.33
- 52-Week High: $73
- $HIMS Stock Price Target: $37
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What Happened?
Hims & Hers (HIMS) stock took a major hit on Monday, plunging over 16% after Novo Nordisk filed a lawsuit against the telehealth company. The Danish drugmaker is targeting Hims & Hers for selling cheaper copies of its popular weight loss medication Wegovy.
Novo seeks a permanent injunction preventing Hims from selling these copycat versions and seeks financial damages.
- The company claims Hims is breaking patent laws and putting patients at risk by selling drugs that haven’t been tested or approved by regulators.
- The lawsuit comes just days after Hims announced it would discontinue sales of its new weight-loss pill following pressure from the FDA.
- Hims had planned to offer the oral medication for as little as $49 for the first month, compared to Novo’s approved Wegovy pill, which costs around $150.
This legal battle centers on compounding pharmacies. These pharmacies can legally make custom versions of drugs when there’s a shortage of the brand-name product.
Novo’s semaglutide injections were in short supply for a while, which allowed companies like Hims to step in. But now that the shortage is over, Novo says these copycats need to go.
The FDA reinforced Novo’s position on Friday by announcing plans to pursue legal action against Hims.
The agency said it might restrict access to the ingredients Hims uses and could refer the company to the Department of Justice.
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What the Market Is Telling Us About HIMS Stock
The sharp drop in HIMS stock indicates investors are concerned about the company’s future in the weight-loss drug market. This business has been a major growth driver for Hims, so losing it could significantly impact revenue.
Novo’s general counsel was blunt in his criticism, calling Hims’ practices “a complete sham” and claiming the company is engaged in “illegal mass compounding.”
He argued that Hims isn’t making personalized medications for individual patients but instead producing large batches of copycat drugs.
Hims fought back in a statement, calling the lawsuit “a blatant attack by a Danish company on millions of Americans” and accusing Big Pharma of limiting consumer choice. The company insists its compounded medications are safe and personalized.
The market reaction suggests investors believe Novo has a strong case.
The drugmaker has already filed around 130 lawsuits dealing with copycat products and deceptive marketing.
Other telehealth companies, such as Ro, have already begun transitioning from compounded versions to FDA-approved products.
For HIMS stockholders, the big question is whether the company can pivot its business model quickly enough.
If Hims is forced to stop selling compounded weight loss drugs entirely, it will need to find new revenue sources or negotiate partnerships with major drugmakers to sell their approved products instead.
The timing is particularly challenging because weight-loss medications have surged in popularity. Novo estimates that as many as 1.5 million Americans are currently using compounded GLP-1 drugs like the ones Hims has been selling.
That’s a massive market that companies like Hims are now being pushed out of.
While HIMS stock appears cheap after today’s drop, investors should monitor how this legal battle unfolds and whether the company can adapt its business model.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
