Hims and Hers' stock fell over 19% in after-hours trading on Monday after its CEO said the company would no longer sell compounded versions of mega-hit weight loss drugs .
"We will have to start notifying customers in the coming month and two that they will need to start looking for alternative options on the commercial dosing," Andrew Dudum, Hims' CEO, said on an earnings call on Monday. "I would suspect, just being very direct, that a lot of those patients will try to go into the open market and try to secure a branded option ."
The telehealth company has been making legal copies of Novo Nordisk's weight loss and diabetes drugs Ozempic and Wegovy during a shortage that began in 2022. On Friday, the US Food and Drug Administration removed semaglutide injection products from its shortage list and gave compounders 60-90 days to stop making copies.
Hims' stock plunged nearly 26% on Friday after the FDA announcement.
Hims has been selling these compounded drugs, which are tailored to individual patients, for a fraction of Novo's prices. Hims' GLP-1 drugs start at $199 a month, while Wegovy and Ozempic cost over $900 a month — though the price many patients pay depends on their insurance.
Earlier this month, Hims ran a Super Bowl ad touting the affordability of its weight loss drugs compared to those sold by big pharmaceutical companies . The ad sparked controversy for promoting weight loss drugs and for omitting safety information.
"Big pharma's reaction to our call to fix today's stuck and sick healthcare system has been to band together and question the need for affordable compounded solutions and incite fear in regular Americans," Dudum said on Monday's earnings call.
Hims can still produce these drugs if there is another shortage or if there is a clinical necessity for personalization of the drug.
In its earnings report, Hims credited these weight-loss drugs for growth in online revenue in 2024.
The company reported $481 million in fourth-quarter revenue, beating analyst expectations of $470 million. Revenue grew 95% compared to the same quarter in 2023.
Chief financial officer Yemi Okupe told Bloomberg in an interview published Monday that weight-loss drugs comprised about around 20% of last year's sales.
On the earnings call, Okupe said the company expects $725 million of its $2.3 billion to $2.4 billion in revenue this year to come from weight-loss drugs. The figure excludes contributions from semaglutide drugs, which will not be offered after the first quarter, Okupe said.
Hims launched in 2017, selling generic hair loss, sexual health, and skincare drugs online via telemedicine. It began selling weight loss copies in 2023.
Wegovy and similar drugs for weight loss have become a huge business. The US adult obesity rate was about 40% from 2017 to 2020, and Goldman Sachs researchers estimated last year that the drugs could be prescribed to 15 million Americans by 2030. The bank's researchers said the anti-obesity drug market could grow to $100 billion by that time.
The highly-coveted drugs are being used by celebrities, including Oprah Winfrey, Elon Musk , and Charles Barkley, and by non-celebrities alike.
Hims shares are up 112% this year.
Read the original article on Business Insider
