HIMS Crashes On Novo GLP-1 Fallout: Buy The Dip Or Bail?

Hims & Hers (HIMS) stock plunged 34% after Novo Nordisk terminated their partnership, citing Hims' unapproved compounding of the weight-loss drug Wegovy. This ends a significant revenue stream for Hims, which generated an estimated $200-$225 million from its GLP-1 business, prompting analysts to re-evaluate its growth trajectory. The stock's high forward P/E of 69.4 further exacerbates concerns, underscoring increased regulatory scrutiny and risk within the telehealth sector, despite Hims' core non-weight-loss verticals.

Analysis

Hims & Hers Health Inc. (HIMS) experienced a significant 34.6% single-day stock decline following the termination of its partnership with Novo Nordisk (NVO). The catalyst for this action was Hims' distribution of compounded versions of Novo's GLP-1 drug, Wegovy, a practice Novo Nordisk deems illegal and which introduces substantial legal and regulatory risk, including potential FDA escalation. This development critically undermines Hims' growth trajectory, as the GLP-1 business was projected to contribute $200–$225 million to its estimated $1.48 billion in 2024 revenue. The stock's valuation appears precarious in this new context, with a forward P/E of 69.4 and a PEG ratio of 3.9, suggesting it was priced for a high-growth narrative that is now in jeopardy. While technical indicators present a mixed view—the stock is below its short-term moving averages but remains above its 200-day moving average with an RSI nearing oversold levels—the fundamental picture is clouded. The company's core business, representing over 80% of revenue from non-weight-loss treatments, provides a foundational base, but the market's focus has shifted to the immediate loss of a major growth driver and the associated legal overhang.

Key Decisions for Investors

• Given the extreme uncertainty from the Novo Nordisk partnership termination and potential FDA action, investors should anticipate continued share price volatility and view the stock as high-risk until legal and regulatory outcomes are clarified.
• The stock's high forward P/E of 69.4 is difficult to justify without the GLP-1 growth catalyst, so it may be prudent to await revised earnings guidance from management and new analyst estimates before assessing the stock's fundamental value.
• Long-term investors might consider monitoring the stock's ability to hold its 200-day moving average ($33.61) as a sign of underlying support, but should weigh any potential entry against the significant damage to the company's growth narrative.
• Investors should closely evaluate the performance of Hims' core business, which constitutes over 80% of revenue, to determine if its stability can offset the material impact of the lost GLP-1 sales and re-anchor the investment thesis.