Hims & Hers stock crashes over 20% on Wegovy shocker

Hims & Hers Health (HIMS) shares plunged 20.66% pre-market after Novo Nordisk (NVO) abruptly terminated their partnership, citing concerns over HIMS's distribution of Wegovy. Novo Nordisk's decision stemmed from alleged violations of laws regarding mass sales of compounded drugs, misleading marketing practices, and the potential sourcing of semaglutide from unauthorized manufacturers. This represents a significant setback for HIMS, which had aimed to broaden Wegovy access, and is further underscored by Bank of America reiterating an 'Underperform' rating due to slowing core revenue growth from 45% to 29% and anticipated fading benefits from longer-duration subscriptions.

Analysis

Hims & Hers Health experienced a severe stock decline, with shares falling 20.66% to $50.59 in pre-market trading, following Novo Nordisk's abrupt termination of their Wegovy distribution partnership. The dissolution is rooted in serious allegations from Novo Nordisk, which cited concerns over Hims & Hers' potential violation of laws on compounded drugs, misleading marketing, and the possible use of unauthorized semaglutide suppliers. This development deals a significant strategic setback to Hims & Hers, derailing a key initiative to penetrate the lucrative weight-loss market that had underpinned the stock's 154% year-to-date rally. The negative catalyst is amplified by an underlying deceleration in business fundamentals, as highlighted by Bank of America's reiterated 'Underperform' rating and $28 price target. The bank's analysis points to a sharp slowdown in core revenue growth from 45% in Q3 2024 to 29% in Q1 2025, with expectations for this to decline further into the mid-teens by late 2025 as benefits from longer-duration subscriptions wane.

Key Decisions for Investors

• Investors should reassess Hims & Hers' risk profile, as the termination highlights significant operational and regulatory vulnerabilities in its high-growth weight-loss strategy.
• Consider the dual impact of the lost Novo Nordisk partnership and the documented slowdown in core revenue growth, which together challenge the stock's prior valuation and growth narrative.
• It is critical to monitor for any potential regulatory investigations or legal actions stemming from Novo Nordisk's allegations, as these could introduce further downside risk and operational disruption for the company.