Shares of Hims and Hers Health (NYSE:HIMS) slid 14% in premarket trading following the telehealth company’s announcement of second-quarter revenue that fell short of Wall Street expectations, amid increasing legal and regulatory scrutiny surrounding its compounded weight-loss drug offerings.
Quarterly revenue rose to $544.8 million but missed the consensus forecast of $549.9 million.
Investor concerns have recently intensified around Hims’ GLP-1 business, which markets compounded versions of semaglutide—the key ingredient in blockbuster drugs Wegovy and Ozempic, both produced by Novo Nordisk (NYSE:NVO).
Last week, Novo Nordisk lowered its annual sales forecast, attributing weaker U.S. demand for its GLP-1 drugs partly to the widespread availability of compounded alternatives. The company has also increased legal actions against platforms selling these compounded versions, labeling such sales as unlawful and unsafe.
Novo recently ended a brief partnership with Hims and has initiated lawsuits targeting compounded semaglutide distribution.
Hims currently offers a prepaid annual program costing $199 per month for a “personalized” dose of compounded semaglutide, the active ingredient in Novo Nordisk’s widely used obesity treatment Wegovy.
Hims initially benefited from the FDA’s decision to permit compounding pharmacies to sell semaglutide copies to alleviate shortages of Wegovy and Eli Lilly (NYSE:LLY)’s Zepbound, following a surge in demand since 2022. However, the FDA declared earlier this year that the shortage had resolved and urged firms to halt mass sales of compounded versions.
Growth has since slowed, with Hims reporting that its GLP-1 business generated $190 million in online revenue last quarter, down from $230 million in the previous three months.
Higher shipping costs and subscriber losses also affected profitability, though adjusted earnings per share of $0.17 still exceeded forecasts by two cents.
For the third quarter, the company projects revenue between $570 million and $590 million, closely aligned with the analyst consensus of $584.2 million.
Full-year revenue guidance remains between $2.3 billion and $2.4 billion, broadly matching analyst estimates of $2.36 billion.
“Hims appears to be heading into the second half in a state of transition as they work through a wind-down in the […] GLP-1 revenue stream” and undergo a shift in focus toward a sexual health business, which includes the sale of erectile dysfunction generic drugs, analysts at Needham said in a note.
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