Hims to cut 4% of workforce amid ban on weight-loss drug copies

Hims & Hers will cut 4% of its workforce (68 employees) following the FDA ban on mass-produced compounded versions of Novo Nordisk's Wegovy, a weight-loss drug that significantly contributed to Hims' revenue growth. The ban, effective May 22, has already impacted Hims' stock, which is down 14%. While Hims is pursuing new growth opportunities, including a potential agreement with Novo and expansion into other treatment areas, analysts are uncertain whether Hims' strategy of personalized Wegovy copies will withstand potential legal challenges from Novo.

Analysis

Telehealth platform Hims & Hers is implementing a workforce reduction, cutting 68 employees or approximately 4% of its staff, directly following the U.S. Food and Drug Administration's (FDA) ban on mass-produced compounded copies of Novo Nordisk's weight-loss drug, Wegovy, which took effect on May 22. This regulatory change has tangibly impacted Hims, with its shares declining 14% since the ban's implementation. The compounded Wegovy offering was a significant growth driver for Hims, contributing to a 111% year-over-year revenue increase in the first quarter of 2025 and accounting for $200 million of its $1.5 billion revenue in 2024. In response, Hims is pursuing a multi-pronged strategy: attempting to pivot to "customized" compounded Wegovy offerings featuring smaller doses or individualized titration plans, exploring an agreement with Novo Nordisk for patient access to branded Wegovy, and diversifying into new therapeutic areas such as low testosterone, menopause treatments, longevity, and sleep. However, skepticism exists regarding the viability of its customized compounding strategy, with analysts like Jailendra Singh of Truist highlighting uncertainty over whether this approach will meet clinical exemption needs or withstand potential legal challenges from Novo Nordisk. Despite the layoffs aimed at "sharpening execution," Hims states it plans to continue hiring for roles supporting its long-term growth ambitions.

Key Decisions for Investors

• Investors should closely monitor Hims & Hers' progress in navigating the regulatory landscape for compounded GLP-1s and the outcome of any potential legal challenges from Novo Nordisk regarding its 'customized' Wegovy offerings.
• Evaluate the execution and market traction of Hims' diversification into new treatment areas such as low testosterone and menopause, as well as any developments in its proposed collaboration with Novo Nordisk for branded Wegovy access.
• Consider the heightened risk profile following the FDA's ban, which impacts a significant revenue stream ($200 million in 2024), and the recent 14% share price decline when assessing positions in HIMS, anticipating potential continued stock volatility.