The move: Hims & Hers stock plunged by as much as 27% on Tuesday, hitting an intraday low of $37.29. The stock is down by 49% from its peak of $72.98 last week.
The chart:
Why: Hims & Hers said it would soon stop selling commercially available compounded versions of popular GLP-1 drugs .
"We will remove all commercially available doses" of semaglutide, the company's chief financial officer, Yemi Okupe, said after the company released its fourth-quarter earnings on Monday.
Last week, the Food and Drug Administration removed semaglutide, the active ingredient in Ozempic, from its shortage list.
The FDA allows for the sale of compounded versions of drugs on its shortage list to limit patient supply issues. In 2022, the FDA placed semaglutide on the shortage list, opening the door for Hims & Hers to sell copycat versions of the drug.
While it is phasing out commercially available doses of its weight-loss drug, the company said it would still offer "personalized doses of semaglutide as clinically necessary."
What it means: Hims & Hers' business boomed over the past year thanks to sales of its compounded GLP-1 drugs.
Revenue surged by 69%, to $1.48 billion, in 2024, with the drugs making up about 15% of those sales. That boom in business translated into a booming stock price: Its shares have more than tripled since November.
But with the company's main source of growth set to be extinguished, its unclear how it can sustain its lofty valuation, with the stock trading at a price-to-earnings ratio of about 87x.
Emphasizing the stiff competition in the market for obesity drugs, Eli Lilly , which sells its own GLP-1 drugs, announced on Tuesday that it would lower the price of its drugs in vial form for people paying out of pocket rather than using insurance.
What the pros are saying: Citi estimated that GLP-1 drugs accounted for over $130 million of Hims & Hers' revenue in the fourth quarter, with very little growth for the company outside the drugs.
"Now that semaglutide is off shortage, we think revenue guidance (56-63% y/y growth) is aspirational as it assumes $725M of revenue from weight loss products," analysts at Citi said.
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