Hims & Hers' Legal Crisis: A Cautionary Tale for Investors in Telehealth Partnerships

The abrupt termination of Hims & Hers Health, Inc.'s (NYSE: HIMS) partnership with Novo Nordisk has thrust the telehealth company into a securities fraud investigation, exposing vulnerabilities in its business model and triggering a 30% stock plunge in three days. For investors, this crisis underscores the perils of relying on high-profile partnerships in the telehealth sector—and the opportunities for recovery through class action lawsuits. Here's what investors need to know to navigate the fallout and protect their interests.

The Legal Storm: Misleading Claims and Regulatory Blowback

The partnership collapse began on June 23, 2025, when Novo Nordisk accused Hims & Hers of selling “illegitimate, knockoff versions of Wegovy” under the guise of personalized medicine. Novo alleged that Hims & Hers violated FDA regulations by mass-producing compounded semaglutide—a Wegovy generic—using unapproved Chinese ingredients. The FDA had already restricted such practices, permitting compounding pharmacies to produce knockoffs only for medically necessary cases during the Wegovy shortage. Novo's complaint, supported by a Brookings Institute report, revealed that Hims & Hers sourced semaglutide from Chinese manufacturers with unaddressed quality violations, risking patient safety.

These accusations have sparked two major legal investigations:
1. Bleichmar Fonti & Auld LLP is probing whether Hims & Hers misled investors about its compliance with FDA regulations and the viability of its partnership with Novo Nordisk.
2. Law Offices of Howard G. Smith is examining claims that Hims & Hers inflated stock prices by falsely assuring investors of regulatory compliance.

Both firms are targeting shareholders who purchased Hims & Hers stock between April 29 and June 23, 2025—a period during which the company's stock rose to $64.22, only to crash to $41.97 after the partnership ended.

The plunge contrasts starkly with broader market stability, underscoring the partnership's central role in valuing the stock.

Why This Matters for Investors: A Valuation Reset

The stock's collapse reflects a recalibration of Hims & Hers' business model. The company's strategy hinged on partnerships to distribute high-margin drugs like Wegovy, which it marketed as a personalized solution for obesity. With Novo Nordisk's allegations now public, investors must reassess whether Hims & Hers can:
- Secure alternative partnerships without regulatory risks.
- Compete in a market where FDA scrutiny of compounded drugs is tightening.
- Recover its reputation after being linked to unapproved, potentially unsafe medications.

Legal penalties could further strain its finances. If found liable, Hims & Hers may face fines, mandatory refunds to patients, or restrictions on future partnerships. These risks make its current valuation speculative at best.

Class Action Opportunities: Acting Before the Deadline

Investors who bought Hims & Hers stock during the April–June 2025 period may qualify for a class action lawsuit. Key steps to take:
1. Submit a claim via the law firms' websites to be included in potential settlements.
2. Monitor deadlines: Securities class actions typically have statutes of limitations of 1–2 years from the announcement date (June 23, 2025).
3. Avoid further losses: Selling shares now could lock in losses, but holding requires confidence in Hims & Hers' ability to resolve the crisis.

Due Diligence Lessons for Telehealth Investors

The Hims & Hers saga offers a blueprint for evaluating future investments in telehealth firms:
- Scrutinize partnerships: High-profile alliances with pharma giants like Novo Nordisk may seem advantageous, but investors must verify the legal and regulatory frameworks governing such deals.
- Follow supply chains: Telehealth companies distributing prescription drugs should disclose their suppliers and compliance with FDA standards.
- Watch for red flags: Sudden stock surges tied to partnerships—without clear financial or operational proof—often precede collapses when those partnerships fail.

The Bottom Line: Proceed with Caution

Hims & Hers' crisis is a wake-up call for investors in the telehealth sector. While class action lawsuits may recover some losses, the company's long-term viability hinges on resolving regulatory issues and rebuilding trust. Until then, investors should prioritize firms with transparent compliance practices and diversified revenue streams. For those holding Hims & Hers stock, legal action is a critical step—but patience and due diligence will be key to any recovery.

Stay vigilant. Stay informed.