Hims & Hers: Betting on Wegovy in a Post-Compounding GLP-1 World

The FDA’s crackdown on compounded semaglutide has sent Hims & Hers’ stock into a tailspin, with shares down 18% year-to-date amid fears of lost revenue from unregulated drug sales. Yet beneath the volatility lies a contrarian opportunity: a partnership with Novo Nordisk that could transform Hims into a pillar of the $50 billion weight-loss drug boom—if executed flawlessly.

The Regulatory Crossroads: Compounded GLP-1’s Sunset

The FDA’s May 22 deadline to halt non-patient-specific compounded semaglutide production marks a pivotal shift. For Hims, which marketed compounded versions through its telehealth platform, this spells short-term pain. Analysts estimate compounded drugs contributed ~20% of 2024 revenue, now evaporating as pharmacies shutter unapproved lines.

The immediate hit is clear: Hims’ Q2 2025 revenue guidance ($530–$550 million) fell $34 million below expectations, with management citing “regulatory headwinds.” Yet this pain is temporary. The far greater question is whether Hims can leverage its $725 million/year Wegovy business—a partnership with Novo Nordisk—to dominate the post-compounding era.

The Novo Nordisk Deal: A Lifeline or a Crutch?

Hims’ collaboration with Novo Nordisk offers a lifeline to stabilize growth. Subscribers now access Wegovy—the gold-standard weight-loss injectable—at $599/month, a 57% discount to list prices, via NovoCare Pharmacy. The model combines:
- Scalable supply: Novo’s resolved manufacturing bottlenecks ensure consistent Wegovy availability.
- Margin resilience: While gross margins dipped to 73% in Q1 2025 (vs. 82% a year earlier), the partnership’s fixed revenue-sharing terms shield Hims from volatile compounded drug costs.
- Defensible pricing: Competitors like LifeMD and Ro offer Wegovy at similar prices, but Hims’ bundled services (24/7 medical support, nutrition coaching) create a sticky $599/month subscription.

The Contrarian Case: Buy the Dip, but Watch the Execution

The bear case is simple: Hims is overvalued in a crowded GLP-1 market, reliant on a single drug partner. The bull case is stronger:
1. Market tailwinds: The FDA’s crackdown has consolidated demand for approved drugs like Wegovy, which saw 63% U.S. prescription growth in 2024.
2. Network effects: Hims’ 2.37 million subscribers—up 38% year-over-year—form a captive audience for future therapies (e.g., Novo’s once-weekly tirzepatide).
3. Margin expansion: As compounded drug sales fade, Hims’ gross margins could rebound toward historical levels by 2026, assuming Novo’s supply holds.

Risks: The Three Execution Hurdles

• Supply chain dependency: A Novo manufacturing hiccup (or new FDA restrictions) could cripple Hims’ Wegovy sales.
• Pricing wars: Competitors may undercut the $599/month model as generics (like liraglutide) gain traction.
• Regulatory overreach: The FDA’s scrutiny of telehealth prescribing practices could limit subscriber growth.

Investment Thesis: Buy on Dip, Target 2026 Earnings

At current prices (~$12/share, down from $18 in 2023), Hims trades at just 4.5x its $2.3 billion 2025 revenue guidance. This discounts the $6.5 billion 2030 target, but the near-term path is clear:
- 2025: Ride the Wegovy wave to meet $2.3B revenue, with adjusted EBITDA hitting $315 million.
- 2026: Leverage Novo’s pipeline (e.g., once-weekly GLP-1) and diversification into menopause care to grow revenue 25%.

Final Verdict: A High-Reward, High-Risk Pivot

Hims’ stock volatility reflects a company at a crossroads. The Novo partnership is its best chance to thrive in a post-compounding world—but success hinges on flawless execution. For investors willing to bet on Hims’ ability to navigate FDA scrutiny and scale its digital-first model, the risk-adjusted reward is compelling.

Action: Consider accumulating Hims shares at current levels, with a 12–18 month horizon. Set a stop-loss at $9/share and a target of $18–$22 by late 2025. Monitor Q3 2025 earnings for Wegovy adoption rates and margin recovery.

The GLP-1 market is winner-takes-most. Hims’ partnership with Novo Nordisk could make it that winner—if it survives the FDA’s regulatory gauntlet.