Hims & Hers on track for biggest drop ever after Novo Nordisk ends partnership

Hims & Hers stock plunged, on track for its biggest single-day drop ever, after Novo Nordisk said it was ending its relatively new partnership with the telehealth company, citing concerns about what it called Hims’ “illegal mass compounding and deceptive marketing.”

Shares were recently down 27%.

The move is a sharp reversal from less than two months ago, when the companies announced a partnership on April 29 that allowed Novo’s blockbuster weight-loss drug, Wegovy, to be sold on the Hims & Hers platform. The drugmaker also announced partnerships with two other telehealth companies, Ro and LifeMD, on the same day.

The partnership between parties that had been adversaries when it comes to GLP-1s reflected the drugmaker’s desire to tap into uninsured consumers and the telehealth company’s desire to get name-brand products in its portfolio. When the pact was announced, Hims’ stock jumped 23% in a day.

Novo Nordisk calling Hims’ compounding practices “illegal” is notable considering it has sued dozens of wellness clinics for selling compounded semaglutide. Lawsuits from giant drugmakers are a growing risk for telehealth companies — Eli Lilly has recently sued telehealth providers that continued to sell copies of weight-loss drug Zepbound after the shortage of that drug ended.

Wegovy is still shown as available on its website.

In a Monday afternoon post on X, Hims CEO Andrew Dudum said Novo pressured the company to steer customers away from compounded drugs.

"We refuse to be strong-armed by any pharmaceutical company’s anticompetitive demands that infringe on the independent decision making of providers and limit patient choice," he said.

Hims and its peers had been selling copycat versions of Novo’s weight-loss drugs for about a year while they were allowed to by the government during a shortage. But once that shortage ended in February, their ability to continue selling exact copies became limited.

Novo said it saw the partnership as a way to help Hims patients transition from compounded medications to its branded product. But Hims and others continued to offer compounded versions of Wegovy, marketing them as “personalized.”

Compounded versions of Wegovy can still be sold if a patient requires a modification, such as to remove a nonactive ingredient that they’re allergic to, or if they need a dose that the drugmaker doesn’t manufacture. But Novo is accusing Hims of “mass compounding,” suggesting that its compounded products aren’t made for specific patients. Compounded drugs offer telehealth companies higher margins than branded or generic.

When the partnership was announced in April, a Novo executive said the drugmaker and Hims were “developing a road map that combines Novo Nordisk’s innovative medications with Hims & Hers’ ability to deliver access to quality care at scale.” That aligns with Hims’ broader expansion vision. Novo did not respond to multiple requests for clarification on the nature of that collaboration.

Earlier this month, Lucas Montarce, Eli Lilly’s chief financial officer, said a provision in the company’s partnerships with telehealth providers is that they don’t compound either tirzepatide or semaglutide, the scientific names for Zepbound (Lilly’s weight-loss shot) and Wegovy. That confused industry onlookers because at least two of its partners appear to continue selling compounded versions.

Notably, Novo called off the partnership with Hims less than a week after it scored a legal win solidifying the Food and Drug Administration’s removal of semaglutide from its shortage list. The removal was challenged by a compounding pharmacy trade group that said the FDA ignored signs the drug was still in short supply. 

On June 17, the judge sided with the drugmaker, cementing the end of the shortage and Novo’s sole ability to mass produce semaglutide. (The trade group, Outsourcing Facilities Association, filed an appeal.)

Luke Kawa contributed to this article.