Hims & Hers Health Inc. (NYSE: HIMS) experienced a dramatic stock plunge of over 31% in a single trading day, after news broke that Novo Nordisk had abruptly ended its partnership with the telehealth company. The fallout stems from Hims allegedly selling compounded versions of Wegovy, Novo Nordisk’s popular weight loss drug, raising legal and ethical red flags.
Why Novo Nordisk Pulled Out
The partnership between Hims & Hers and Novo Nordisk was just two months old when it collapsed. According to Novo, the telehealth platform violated federal law by engaging in the mass sales of compounded drugs, which are only legal under strict conditions. The pharmaceutical giant also accused Hims & Hers of deceptive marketing practices that could jeopardize patient safety—a serious allegation that instantly rattled investor confidence.
At the time of reporting, Hims & Hers had not yet responded to media inquiries, including those from CNBC.
The Stock Reaction: Fast and Brutal
- Intraday drop: -31.5%
- Year-to-date gains erased: HIMS stock had risen from around $25 to $61 before this news; it has since plummeted back down, nearly erasing most of 2024’s gains.
While some traders may see this as a potential buying opportunity, others view it as a red flag due to legal uncertainty and potential reputational damage.
Key Fundamentals (Before the Drop)
Despite the sudden collapse, Hims & Hers had posted impressive financials:
- Revenue: Up 110% YoY
- Net income: Up 345%
- EPS growth: Up 300%
- Q1 Earnings: Beat expectations by 24.18% on EPS and 8.75% on revenue
The company had shown clear momentum—much of which now seems tied to the excitement around its weight-loss drug offerings, including the Novo Nordisk partnership.
High Valuation, No Dividend
Even before the drop, HIMS was trading at a high P/E ratio of 63.9, with no dividend yield, which puts pressure on the company to continue delivering high growth just to justify its valuation.
Investor Sentiment & Insider Activity
- Robinhood users: Shifted quickly from buying to selling once the news broke.
- Hedge funds (Q1 data): Slightly bullish before the news, but Q2 sentiment could change drastically.
- Insider trading (June 2025): 62% buy vs. 38% sell, but again, this predates the news.
Analyst Ratings (Robinhood data):
- Buy: 35.7%
- Hold: 50%
- Sell: 14.3%
These aren't encouraging figures—especially compared to top-tier growth stocks where buy ratings typically dominate.
Business Model: High Potential, High Risk
Hims & Hers operates a subscription-based telehealth platform, offering virtual consultations, treatment plans, and prescriptions. Originally focused on men's health (ED, hair loss), the brand expanded to women’s health and now offers medications for a variety of conditions—including weight loss.
While the business model is disruptive, this situation underscores the regulatory challenges telehealth companies face when entering the highly controlled pharmaceutical space.
Workplace & Culture Check
If you believe company culture reflects leadership integrity, this might raise eyebrows:
- Employee rating: 3.1 out of 5
- Would recommend to a friend: ~50%
- CEO approval: 60%
Not terrible—but not the kind of standout internal feedback you’d expect from a company being considered for long-term investment.
Final Thoughts: Buy the Dip or Avoid the Risk?
This crash highlights how regulatory compliance and trust are just as critical as revenue growth and innovation—especially in the health tech space.
- Bullish case: If the company can resolve this legal issue and regain public trust, it could bounce back. The fundamentals were strong pre-crisis.
- Bearish case: Legal risk, reputational damage, and management concerns may not be priced in yet—making it dangerous for new investors.
Bottom line: If you're already holding HIMS, this may be a time to reassess but not panic. If you're on the sidelines, it may be wise to wait for clarity before jumping in.
⚠️ This article is for informational purposes only and does not constitute financial advice. Always do your own research or consult a financial advisor before investing.