Hims & Hers Lawsuit: Navigating Risk and Recovery in a Collapsing Stock

The Hims & Hers class action lawsuit, filed in July 2025, has thrust the healthcare startup into a legal and financial maelstrom. At the heart of the allegations: deceptive claims about its partnership with Novo Nordisk and the promotion of illegitimate Wegovy® knockoffs. For investors, the fallout has been severe—shares plummeted over 34% in a single day after the partnership's abrupt termination. This article evaluates the stock's current risks, potential recovery avenues for investors, and the implications for future market confidence.

The Lawsuit: Allegations and Market Impact

The lawsuit, Sookdeo v. Hims & Hers Health, Inc., accuses the company of making materially false statements between April and June 2025. Key claims include:
- Misleading Partnership Claims: Hims & Hers allegedly misrepresented its collaboration with Novo Nordisk, falsely asserting compliance with FDA regulations while selling unapproved compounded Wegovy.
- Insider Trading Concerns: CEO Andrew Dudum sold $10 million in shares just days before the partnership's termination was announced.
- Regulatory Risks: The FDA's May 2025 ban on compounded Wegovy and the abrupt shutdown of Hims & Hers' compounding pharmacy, Apostrophe, were withheld from investors.

These misrepresentations inflated the stock to a February 2025 high of $68.74. However, the June 23 revelation of the partnership's termination triggered a catastrophic decline, erasing billions in market value.

(Expected outcome: A chart showing a sharp decline from ~$65 to ~$44 post-June 23, with volatility marking investor panic.)

Investor Risk Assessment

1. Legal Uncertainty: The case is in its infancy. No court rulings or settlements have been reached, and the August 25 deadline for lead plaintiff applications adds pressure for investors to act swiftly.
2. Operational Risks: Without Novo Nordisk's support, Hims & Hers' weight-loss business—a core revenue driver—is in limbo. FDA scrutiny of compounded drugs further undermines its ability to pivot.
3. Reputational Damage: The lawsuit's claims of fraud could deter future partnerships, patients, and institutional investors.

Potential Recovery for Investors

The lawsuit seeks to recover losses for investors who bought securities during the April 29–June 23, 2025, period. Key steps for participation:
- Act by August 25: Filing for lead plaintiff status is critical. Eligible investors must demonstrate significant losses and the willingness to represent the class.
- Consult Legal Counsel: Firms like The Gross Law Firm and Hagens Berman are actively recruiting clients. Their contingency fee structures mean investors pay nothing upfront.
- Monitor Case Progress: Settlements in securities fraud cases typically take 2.5–4 years. Early motions to dismiss or class certification rulings could signal the case's viability.

Historically, class action settlements average 10–30% of claimed losses. If Hims & Hers' liability is proven, a recovery of 15–25% of post-June 23 losses is plausible. However, delays or a strong defense could reduce payouts.

Investment Strategy: Hold, Sell, or Avoid?

For Current Holders:
- Avoid Adding to Positions: The stock's fundamentals are deteriorating. Without Wegovy or FDA approval, long-term viability is in doubt.
- Consider Selling: The legal and operational risks outweigh speculative upside.

For Potential Buyers:
- Wait for Clarity: Avoid until the lawsuit's trajectory is clearer. A settlement or regulatory resolution could stabilize the stock, but the path remains uncertain.

For Class Members:
- Participate in the Lawsuit: Filing a claim is free, and settlements often include provisions for late filers. Ignoring the deadline risks forfeiting recovery opportunities.

Conclusion: A Fragile Recovery and Lingering Risks

Hims & Hers' stock is a cautionary tale of overhyped growth and regulatory overreach. While the class action offers hope for partial recovery, investors must weigh the timeline and uncertainties. For now, the stock's risk profile is elevated, and recovery hinges on the legal outcome and the company's ability to rebuild trust—a daunting task given the allegations.

Final advice: Treat Hims & Hers as a speculative play until the lawsuit concludes. Focus on protecting existing positions and prioritize safer opportunities elsewhere.

(Expected outcome: A table showing a sharply reduced market cap versus pre-lawsuit levels, with a 52-week range emphasizing the June collapse.)