Hims & Hers Health Inc (HIMS), a telehealth company known for its compounded alternatives to popular GLP-1 weight-loss treatments, has experienced a remarkable surge in its stock price. Since August 2023, HIMS shares have soared over 120%, outpacing gains by industry giants Eli Lilly And Co (LLY) and Novo Nordisk A/S (NVO), which have climbed 67% and 44%, respectively.
This surge underscores the massive market opportunity presented by the explosive demand and supply shortages for weight-loss drugs like Wegovy, Ozempic, and Mounjaro. Hims, initially focused on erectile dysfunction and hair-loss treatments, recently expanded into GLP-1 offerings, capitalizing on the scarcity of these medications by providing compounded alternatives—pharmacy-produced copies that lack FDA approval. While not generics, these compounded drugs are legal when the original medication is in short supply.
Hims’ stock remained below its initial $10 price for much of 2021 through 2023 until May, when the company announced its plans to sell a version of Wegovy. In August, Hims further bolstered investor confidence by acquiring a compounded pharmacy to secure its supply chain. This move, coupled with Hims’ significantly lower price point of $199 per month compared to over $1,000 for branded alternatives, has attracted considerable consumer interest.
However, challenges remain. Safety concerns and legal battles loom large. Novo Nordisk and Eli Lilly have filed multiple lawsuits to curb the sale of compounded versions. Investors are also wary of what might happen once the branded drug shortage is resolved, potentially leaving Hims’ stock vulnerable to a sharp decline.
Despite these concerns, Hims’ remarkable growth highlights the potential of telehealth companies to capitalize on emerging market opportunities. As the demand for weight-loss treatments continues to rise, Hims’ ability to provide affordable alternatives positions it as a key player in the evolving healthcare landscape.
