Hims & Hers Health: Navigating Regulatory Headwinds to Build a Telehealth Empire

Hims & Hers Health (HMHS) finds itself at a pivotal crossroads in 2025: a regulatory landscape reshaped by the FDA's crackdown on Wegovy generics, coupled with strategic layoffs and partnerships that could redefine its future. For investors weighing whether this is a buying opportunity, the company's moves to pivot toward FDA-compliant ventures—while navigating legal risks—paint a compelling, if complex, picture of long-term potential.

The FDA's Double-Edged Sword: A Catalyst for Change

The FDA's May 2024 decision to end compounded Wegovy sales, which once accounted for $200 million of Hims' $1.5 billion annual revenue, forced the company to act swiftly. While the ban initially sent Hims' stock plummeting, the resulting layoffs—4% of its workforce—were not merely cost-cutting measures. They signaled a deliberate reallocation of capital to high-growth, FDA-sanctioned initiatives.

Strategic Shifts: Partnerships as Lifelines

The most critical move? Hims' April 2025 partnership with Novo Nordisk, the maker of Wegovy. By bundling Wegovy with telehealth services—offering 24/7 clinical support, nutrition guidance, and personalized dosing at $599/month—Hims aims to replace lost revenue while positioning itself as a leader in integrated obesity care. This collaboration not only sidesteps legal risks tied to compounded generics but also aligns with Novo's goal to combat competition from Eli Lilly and unregulated pharmacies.

The partnership's success hinges on execution: integrating Novo's supply chain, scaling beyond U.S. borders, and maintaining margins as Novo tightens pricing terms. Yet, early results are promising. Post-announcement, Hims' stock surged 27%, reflecting investor confidence in its pivot.

Beyond Wegovy: Diversifying into Niche Markets

Layoffs also freed resources to expand into underpenetrated niches: menopause treatments, low testosterone therapies, and longevity-focused offerings. These markets, projected to grow at double-digit rates, align with Hims' core telehealth model while reducing reliance on a single drug.

In February 2025, Hims further verticalized its supply chain by acquiring a U.S. peptide facility—a move critical for controlling costs and quality as it develops innovative treatments in metabolic optimization and cognitive performance.

Financials: Growth at a Crossroads

Hims' Q1 2025 results underscore its potential. Revenue soared 111% YoY to $586 million, with subscribers hitting 2.4 million—a 38% increase. Even with 2030 targets of $6.5 billion in revenue and $1.3 billion in EBITDA, the company's 22% CAGR goal appears achievable if it executes on AI-driven personalized care and international expansion.

Risks: Legal Battles and Dependency

The company isn't without vulnerabilities. Novo Nordisk's legal challenges to Hims' “personalized” drug strategy—arguably a loophole to mimic generic Wegovy—could disrupt its supply chain. Additionally, 70% YoY growth in operating expenses highlights execution risks as Hims scales.

Competitors like Ro and Teladoc also loom, leveraging their own telehealth platforms and insurance partnerships. Meanwhile, Hims' dependency on Novo's supply chain introduces margin compression risks if pricing terms shift.

Why Now is the Buying Opportunity

The current stock price—down 18% post-Q1 earnings due to cautious guidance—creates a compelling entry point. Hims' stock remains twice its pre-weight-loss-drug value, yet its forward P/S ratio of 2.3x is reasonable given its growth trajectory.

Historically, this approach has proven rewarding: between 2020 and 2025, buying HMHS on earnings announcement days and holding for 20 days delivered an 187% return, nearly doubling the benchmark's 99% performance. With a compound annual growth rate (CAGR) of 22.8%, this strategy aligns with the company's ambitious growth targets, suggesting that current volatility could present a rare buying opportunity.

The layoffs and strategic shifts have sharpened focus on high-margin, FDA-compliant ventures. The Novo partnership and leadership hires—CTO Mo Elshenawy (ex-Cruise) and COO Nader Kabbani (ex-Amazon)—signal a tech-driven, operationally efficient future.

Final Verdict: A Telehealth Titan in the Making

Hims & Hers is not just surviving regulatory headwinds—it's using them to forge a dominant position in integrated telehealth. While risks remain, the company's ability to pivot capital toward FDA-approved innovations, diversify into niche markets, and leverage partnerships positions it to capitalize on a $100 billion obesity drug market by 2030.

For investors prioritizing innovation in telemedicine and niche pharmaceuticals, Hims' post-announcement dip presents a rare chance to buy a potential industry leader at a discount. The question isn't whether regulatory tightening will persist—it's whether Hims can turn it into an advantage. The data suggests they're already doing just that.

Invest now, and you may witness the birth of a telehealth empire.