Hims & Hers Health (HIMS) tumbled another 10% on Tuesday as its woes mount following its effort to skirt regulations on compounded GLP-1 weight-loss drugs.
The telehealth company's stock plunged 16% on Monday following twin regulatory strikes from the FDA and HHS over its knockoff Wegovy pill. The FDA announced restrictions on active ingredients for unapproved compounded semaglutides, highlighting safety risks and improper mass-marketing practices, while HHS referred the company to the Justice Dept. for potential violations of federal drug laws.
This came shortly after Hims launched a $49 monthly oral compounded semaglutide on Feb. 5 as a cheaper alternative to Novo Nordisk's (NVO) Wegovy. Despite pulling the product after "stakeholder discussions," Hims now faces a patent infringement lawsuit from Novo Nordisk that was filed on Monday seeking a permanent sales ban and monetary damages.
Novo Nordisk's Pursuit of Royalties and Lost Profits
The lawsuit from Novo Nordisk could impose significant financial burdens on Hims & Hers, as the Danish pharma giant alleges infringement on its semaglutide patents, which cover the active ingredient in Wegovy and Ozempic until 2032. Novo is not only demanding a permanent injunction but also seeks compensation for damages, which could include royalties on past sales of the compounded products or calculations of lost profits from diverted customers.
Analysts estimate that even brief market exposure to Hims' $49 pill could have generated millions in revenue, potentially translating to substantial payouts if courts rule in Novo's favor. Such remedies are common in patent disputes within the pharmaceutical sector, where innovators protect high-margin blockbusters like Wegovy, which generated over $20 billion in sales last year.
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For Hims, a smaller telehealth player with a market cap under $4 billion, these claims could erode cash reserves and force costly settlements, further pressuring margins already thin in competitive digital health spaces. The suit underscores Novo's aggressive stance against compounders, viewing them as threats to patient safety and intellectual property, especially post-FDA's shortage resolution.
Ripple Effects on Growth and Customer Trust
GLP-1 drugs represented a high-growth avenue for Hims & Hers, tapping into the booming obesity treatment market projected to exceed $100 billion by 2030. The company's foray into compounded semaglutide aimed to capture price-sensitive consumers underserved by branded options, potentially boosting subscriber numbers and cross-selling opportunities.
However, the abrupt pullback and ensuing lawsuit disrupts this momentum, raising concerns about revenue diversification. Investors worry that the loss of this segment could slow overall growth, as GLP-1s were expected to contribute significantly to 2026 projections.
More alarmingly, the regulatory and legal scrutiny might spill over to Hims' core offerings in erectile dysfunction, hair loss, and mental health, eroding customer confidence. If users perceive the platform as risky or non-compliant, churn rates could rise, impacting subscription-based models that rely on long-term loyalty. Competitors like Ro or traditional pharmacies may gain ground, while Hims grapples with reputational damage in an industry where trust is paramount.
Bottom Line
Hims & Hers stock has endured a brutal pummeling, down 47% year-to-date in 2026 and over 76% from its 52-week high of $68.74 set last year. This selloff reflects diminished optimism around its expansion into weight-loss therapies, though it arguably discounts potential in established verticals like ED treatments and dermatology.
Nonetheless, the ongoing legal overhang from Novo Nordisk's lawsuit will continue to weigh on shares, creating uncertainty that deters investment. Investors should steer clear of HIMS stock until a resolution provides clearer visibility on its liabilities.
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