Corporate Governance Risks at Hims & Hers Health Inc.: A Crisis of Board Accountability and Fiduciary Duty

The recent turmoil at Hims & Hers Health Inc. (NYSE: HIMS) underscores a critical failure in corporate governance, particularly in the realm of board accountability and fiduciary responsibility. At the heart of this crisis lies the abrupt termination of the company's partnership with Novo Nordisk A/S in June 2025—a decision attributed to Hims & Hers' alleged deceptive marketing of unapproved compounded versions of semaglutide, a key ingredient in Novo Nordisk's Wegovy® medication. This partnership collapse has triggered a cascade of legal, regulatory, and market consequences, with Berger Montague, a prominent securities litigation firm, now investigating whether the board of directors breached its fiduciary duties in overseeing the collaborationBerger Montague Investigates Hims & Hers Health Inc. (NYSE: HIMS) Board of Directors for Potential Breaches of Fiduciary Duties^[1].

The Governance Vacuum and Fiduciary Failures

Hims & Hers' corporate governance structure, while formally documented in codes of conduct and committee chartersHims Inc. - Governance - Governance documents^[2], appears to have failed in its most fundamental duty: protecting shareholder interests through rigorous oversight. The board's alleged inaction in addressing the company's marketing practices—specifically, the promotion of compounded semaglutide products that Novo Nordisk deemed “illegal”—raises serious questions about its diligenceNovo Nordisk Drops Hims & Hers: Inside the Compounded GLP-1 Crisis^[3]. According to a report by Pharmacy Times, Novo Nordisk explicitly cited concerns over “mass compounding and deceptive marketing,” suggesting that Hims & Hers' leadership prioritized short-term revenue over regulatory compliance*Pharmacy Times* article on Novo Nordisk’s partnership termination^[4].

The consequences of this governance lapse were immediate and severe. On the day of the partnership's termination, Hims & Hers' stock plummeted by 34.6%, erasing over $1.2 billion in market valueYahoo Finance report on Hims & Hers’ stock price drop^[5]. This collapse reflects not only the financial impact of losing a strategic partner but also a broader loss of investor confidence in the board's ability to manage risk. As stated by Berger Montague in its investor alert, the firm is now scrutinizing whether the board “failed to adequately manage risks or disclose material information regarding the partnership and the company's marketing practices”Hims & Hers Health Inc. Breach of Fiduciary Duties Investigation^[6].

Structural Vulnerabilities and Shareholder Power

Compounding these issues is Hims & Hers' dual-class stock structure, which concentrates approximately 90% of voting power in the hands of founder and CEO Andrew Dudum through Class V shares carrying 175 votes per shareHims & Hers Health (HIMS) Stock Risk Analysis - TipRanks.com^[7]. This structure, while common in high-growth tech companies, creates a governance imbalance that limits shareholder influence on critical decisions. As a “controlled company” under NYSE rules, Hims & Hers is exempt from requirements such as independent nominating and compensation committees, further reducing oversight mechanismsHims & Hers Health (HIMS) Stock Risk Analysis - TipRanks.com^[7].

This concentration of power appears to have exacerbated the crisis. While the board's formal governance documents emphasize transparency, the lack of independent voices may have enabled risky decisions to go unchallenged. For instance, the company's SEC filings in 2025 acknowledged the regulatory risks of compounded drug sales but downplayed their immediacyHims and Hers warns investors about potential liability for FDA ...^[8]. Such omissions, now under scrutiny in securities fraud lawsuitsHIMS & HERS HEALTH SHAREHOLDER ALERT by Former Louisiana Attorney General^[9], highlight a disconnect between stated governance principles and actual board behavior.

Regulatory and Market Reactions: A Perfect Storm

The FDA's evolving stance on compounded GLP-1 drugs has further intensified the crisis. By April 2025, the agency ended its enforcement discretion for compounding semaglutide, effectively closing the regulatory loophole that allowed Hims & Hers to market these productsFDA clarifies policies for compounders as national GLP-1 supply begins to stabilize^[10]. This shift, coupled with Novo Nordisk's exit, has left the company in a precarious position. Analysts at Needham downgraded Hims & Hers from “Buy” to “Hold,” citing the competitive disadvantage created by the partnership's terminationNovo Nordisk partnership termination prompts Needham to downgrade Hims stock^[11].

Financial markets have responded with skepticism. Despite strong Q1 2025 results—revenue nearly doubled year-over-year—investors remain wary. The company's stock, which had surged during the height of the GLP-1 boom, now trades at a discount to its pre-2024 valuationHims & Hers Health Inc. Q1 2025 financial results^[12]. This volatility underscores the fragility of a business model reliant on regulatory gray areas and aggressive marketing—a model that may no longer be sustainable.

Implications for Shareholder Value and Strategic Stability

The ongoing investigation and regulatory scrutiny pose existential risks to Hims & Hers' long-term strategy. The company's growth narrative, once anchored to its partnership with Novo Nordisk and its leadership in the telehealth sector, now hinges on its ability to navigate legal challenges and rebuild trust. However, the dual-class structure and governance exemptions may hinder meaningful reforms. As noted in a 2025 governance review, board accountability is increasingly tied to shareholder value creation, yet Hims & Hers' leadership appears to have prioritized expansion over complianceBoard Accountability in 2025: New Standards, New Expectations^[13].

For investors, the lesson is clear: governance failures can swiftly erode value, even in high-growth companies. The case of Hims & Hers illustrates how a lack of board independence, combined with regulatory missteps, can transform a market leader into a cautionary tale. Unless the board demonstrates a commitment to transparency and accountability—through independent oversight, revised risk disclosures, and alignment with FDA guidelines—the company's strategic stability will remain in jeopardy.