Shares of Hims & Hers Health (NYSE: HIMS) took a significant hit on Friday after the U.S. Food and Drug Administration (FDA) announced that the active ingredient in Novo Nordisk’s (NYSE: NVO) Ozempic and Eli Lilly’s (NYSE: LLY) Wegovy is no longer in short supply. This development could have major implications for the telehealth company, which has leveraged regulatory exemptions to offer compounded versions of weight-loss medications.
Regulatory Loophole May No Longer Apply
Hims & Hers has been producing compounded versions of semaglutide-based weight-loss treatments under FDA rule 503B, which permits large-scale compounding of drugs only when the original medications are difficult to obtain. With the FDA’s recent declaration that the shortage has ended, the company may soon lose this exemption, potentially impacting revenue from its weight-loss drug offerings.
To soften the transition, the FDA has granted a 90-day grace period, stating that it “does not intend to take action against 503B drug compounders” until May 22. This temporary buffer provides companies like Hims & Hers a brief window to adjust their business strategies in response to the changing regulatory landscape.
Market Reaction: HIMS Stock Takes a Dive
Investors reacted swiftly to the FDA’s announcement, sending HIMS shares tumbling. The stock’s decline underscores the market’s concern over the potential revenue impact if Hims & Hers loses its ability to offer semaglutide-based compounded treatments. As demand for GLP-1 receptor agonists like semaglutide and tirzepatide (the active ingredient in Eli Lilly’s Mounjaro and Zepbound) continues to surge, access to these medications has been a key growth driver for telehealth providers.
Hims & Hers CEO Responds
In a post on X (formerly Twitter), Hims & Hers CEO Andrew Dudum reassured investors and customers that the company is committed to “offering access to personalized treatments as allowed by law.” He also noted that Hims & Hers is closely monitoring potential future shortages, suggesting that the company may pivot its strategy depending on supply conditions.
Weight-Loss Drug Demand Remains Strong
The broader weight-loss drug market remains red hot, with Ozempic, Wegovy, Mounjaro, and Zepbound experiencing explosive demand. Despite the FDA’s declaration, supply constraints could still reemerge, creating opportunities for compounding pharmacies and telehealth platforms to remain relevant.
As the May 22 deadline approaches, industry watchers will be closely monitoring whether any renewed shortages or regulatory shifts could impact the availability of semaglutide-based treatments. For now, Hims & Hers faces an uncertain road ahead as it navigates a changing regulatory environment and evolving market dynamics.
