HIMS Stock Crashes: Is This a Buying Opportunity?
Shares of Hims & Hers Health (NASDAQ: HIMS) plunged by 28% in midday trading after the company revealed it might not be able to continue selling compounded versions of weight-loss drugs Ozempic and Wegovy. Despite strong fourth-quarter and full-year 2024 results, the FDA’s announcement that the semaglutide shortage had been resolved drastically impacted the stock.
- The FDA declared the semaglutide shortage over, leading to the end of compounded versions’ availability.
- HIMS stock has dropped sharply, with shares now 50% lower from their peak just a week ago.
Compounding Problems for Hims & Hers
Hims & Hers saw a surge in revenue by selling compounded versions of GLP-1 weight-loss drugs at discounted prices. These compounds were made by compounding pharmacies, which are permitted to sell unapproved versions during shortages.
- The FDA’s resolution of the shortage meant Novo Nordisk could meet demand, eliminating the need for compounded versions.
- Compounding pharmacies were given 60-90 days to sell their remaining stock, marking the end of this profitable avenue for Hims & Hers.
This change sent HIMS stock tumbling as investors feared the loss of an important growth driver.
Is There Hope for Hims & Hers?
Despite the setback, Hims & Hers management has not completely ruled out continuing to sell semaglutide compounds. The FDA allows sales in two scenarios: during a shortage and when dosages are personalized beyond standard amounts.
- Personalized dosages could keep some business viable for the company, though supply issues persist.
- Liraglutide, a similar GLP-1 therapy, is expected to launch later this year, but it involves daily injections, unlike semaglutide’s weekly injections, which could make the treatment less convenient and more expensive.
While personalized solutions might offer some growth, the shift to daily injections presents added challenges for the company.
A Gloomy Outlook, but Room for Growth
Hims & Hers still generated $1.2 billion in revenue for 2024, a 43% increase, with strong growth in non-GLP-1 products. It also expanded its customer base by 45%, reaching 2.2 million subscribers in Q4, with many opting for multiple personalized solutions.
- However, the GLP-1 weight-loss drugs were expected to drive much of Hims & Hers’ growth.
- With the resolution of the semaglutide shortage, investors are recalibrating their expectations for the company.
While growth from non-GLP-1 products is promising, the overall outlook has darkened due to the loss of the GLP-1 revenue driver.
Conclusion: Should You Buy HIMS Stock?
The recent decline in Hims & Hers stock highlights the volatility of the healthcare market, especially in direct-to-consumer models. Despite some promising growth in non-GLP-1 areas, the company faces challenges from the resolution of the semaglutide shortage.
- Investors should remain cautious and avoid rushing into HIMS stock, as the market may need more time to adjust expectations.
- While the company isn’t without hope, revaluation of the stock could still continue, suggesting that waiting on the sidelines might be the best approach for now.
