Hims & Hers Health: A Cautionary Tale of Insider Selling and Legal Risks Amid Governance Concerns

In the world of healthcare and technology, few companies have drawn as much scrutiny in 2025 as Hims & Hers Health (HIMS). Once hailed as a disruptor in telemedicine, the firm now faces a perfect storm of corporate governance failures, regulatory scrutiny, and a collapsing partnership with a pharmaceutical giant. For investors, the question is no longer whether Hims & Hers can survive, but how long it can endure amid a cascade of risks that threaten its long-term viability.

Insider Selling: A Signal of Distrust or Disengagement?

Over the past six months, Hims & Hers insiders have executed 118 trades—all sales, with no purchases. This pattern is alarming. The CEO, Andrew Dudum, alone sold 1.2 million shares worth $55.6 million, reducing his holdings to just 92,313 shares. Other executives, including COO Melissa Baird and CFO Oluyemi Okupe, followed suit, offloading millions in shares. While Dudum's trades were conducted under a Rule 10b5-1 trading plan (a tool designed to mitigate insider trading risks), the sheer volume and timing of these sales raise questions about executive confidence in the company's future.

The absence of insider purchases is particularly concerning. In healthy companies, executives often buy shares to signal alignment with shareholders. Hims & Hers' executives have done the opposite, effectively hedging their bets on a business they now appear to be abandoning. This behavior erodes trust and suggests a misalignment of interests that could deter long-term investors.

Legal Risks: From Deceptive Marketing to Shareholder Litigation

The legal challenges facing Hims & Hers are equally dire. The termination of its partnership with Novo Nordisk in June 2025—due to allegations of deceptive marketing and illegal compounding of Wegovy® knockoffs—triggered a 34% plunge in its stock price. Novo Nordisk accused Hims & Hers of mass-producing unapproved semaglutide-based drugs under the guise of personalized compounding, a practice the FDA explicitly prohibits.

The fallout has led to two class-action lawsuits (Sookdeo v. Hims & Hers and Yaghsizian v. Hims & Hers) alleging securities fraud under the Securities Exchange Act of 1934. These cases accuse the company of misleading investors about its compliance with FDA regulations and the stability of its Novo Nordisk partnership. If the lawsuits proceed, Hims & Hers could face penalties akin to Novo's $100 million settlement in 2022 for similar issues.

Governance and Regulatory Challenges: A Systemic Weakness

The insider selling and legal risks are symptoms of deeper governance flaws. Hims & Hers' reliance on regulatory gray areas—such as compounding drugs for mass distribution—has left it vulnerable to enforcement actions. The FDA's involvement now raises the specter of fines, recalls, or even criminal charges if willful violations are proven. Meanwhile, the company's business model, which prioritized cost-cutting over compliance, has alienated partners and eroded patient trust.

Competitors like Teladoc Health (TDOC) and BetterHelp, which focus on FDA-approved therapies and licensed partnerships, now hold a clear advantage. Hims & Hers' attempt to undercut rivals with cheaper, unapproved drugs has backfired, exposing it to reputational and financial ruin.

Investment Implications: A High-Risk Bet with No Clear Upside

For investors, Hims & Hers presents a high-risk proposition. The stock has plummeted 30% since the Novo Nordisk partnership collapse, and its legal liabilities could drag the price lower. Key watchpoints include:
1. Regulatory Compliance: Can Hims & Hers retool its supply chain to meet FDA standards? The costs and time required for this are prohibitive.
2. Legal Outcomes: A favorable settlement in the class-action lawsuits would be a rare silver lining, but the odds of a swift resolution are slim.
3. Competitive Position: The company's market share in weight-loss drugs is now in freefall, with competitors securing partnerships and regulatory approvals it lacks.

Given these risks, a cautious approach is warranted. Investors seeking exposure to telehealth should consider firms with stronger governance and regulatory credibility, such as Teladoc Health. Hims & Hers, meanwhile, remains a speculative bet—only for those with a high tolerance for volatility and a belief in a near-miraculous turnaround.

Conclusion: A Lesson in Regulatory Hubris

Hims & Hers' downfall is a stark reminder of the dangers of cutting corners in a highly regulated industry. The healthcare sector exists to protect patients and ensure quality, and companies that ignore these principles do so at their peril. For Hims & Hers, the road to recovery is blocked by legal, regulatory, and reputational hurdles. Unless it can pivot to a compliant, transparent business model—something it has shown no sign of doing—its long-term viability remains in serious doubt.

Investors would be wise to heed the warnings embedded in its insider sales and legal woes. In the world of healthcare, trust is not a commodity—it's the foundation of survival. And for Hims & Hers, that foundation is crumbling.