Shares of Hims & Hers Health (HIMS) experienced a significant increase on Tuesday, closing 5.25% higher, with an earlier peak rise of 14%. This surge occurred against a backdrop of more modest movements from both the S&P 500 and Nasdaq Composite.
The boost in Hims & Hers’ stock was driven by the company’s announcement of plans to offer the weight loss drug Zepbound on its platform. On Tuesday, the telehealth company disclosed that it would begin offering branded versions of Eli Lilly’s tirzepatide, utilized in both the weight loss drug Zepbound and the diabetes medication Mounjaro. Additionally, Hims & Hers will provide biosimilar versions of Novo Nordisk’s diabetes drug liraglutide, joining competitors such as Teladoc and LifeMD in offering Zepbound.
Previously, Hims & Hers had supplied compounded versions of semaglutide, known commercially as Ozempic and Wegovy, which they and other compounding pharmacies were allowed to sell due to an official shortage of semaglutide. This situation had led to a surge in the company’s revenues. However, following the Food and Drug Administration’s announcement last month that the semaglutide shortage had ended, these sales were required to cease.
The discontinuation of semaglutide sales had a substantial impact on Hims & Hers’ revenue. However, the resumption of sales of a similar drug is expected to positively affect the company’s financial performance. While the margins on these branded drugs will be tighter and their higher retail prices may pose a challenge in terms of sales volume, the company’s overall business remains robust. Hims & Hers benefits from strong brand recognition and advantageous market positioning.
Despite these positives, the company faces valuation challenges following the decline in stock price due to the cessation of compounded semaglutide sales. Observers may wish to monitor the company’s recovery in the weight loss drug sector before considering an investment in the stock.
