The tumble in Hims & Hers Health's share value is currently under scrutiny.
Hims & Hers Health's shares take a tumble on Friday, plummeting a whopping 24.45%. By 1 p.m. ET, the stock had shed an alarming 23.2%, and at its worst, it dipped by 26.1%. The wider market also saw red, with the S&P 500 and Nasdaq Composite losing 1% and 1.3%, respectively.
The telehealth giant, widely renowned for its services, is suddenly facing a significant threat to one of its major revenue sources.
The FDA's Decision: Ozempic is Back in Style
In a surprising turn of events, the U.S. Food and Drug Administration (FDA) removed semaglutide injection products, including blockbusters like Ozempic and Wegovy, from their shortage list. Over the next 60 to 90 days, the FDA will crack down on "compounders" - companies that had been manufacturing generic versions of semaglutide drugs due to the shortage. Going forward, only brand-name semaglutide products will be available, unless the drug once again falls into shortage.
A Blow to Hims & Hers
Though they don't produce these compounds themselves, Hims & Hers Health's profits had soared over the past year, in part thanks to their ability to sell these compounded semaglutide products through their platform. With the FDA's decision, the demand for these alternative versions is set to dwindle, resulting in reduced revenue for the company. The news arrives just as they revealed their purchase of a peptide facility, which had been poised to allow for in-house compounding of these medications.
Despite the grim news, Hims & Hers Health's CEO maintains a hopeful outlook. He believes that the facility will continue to produce other personalized weight loss solutions that can drive sales.
[1] With the FDA removing semaglutide injection products from the shortage list, the demand for compounded versions is likely to decrease, potentially adversely affecting Hims & Hers Health's revenue.[2] Following the FDA's announcement, Hims & Hers Health's stock price tumbled by 23.35%. Concerns about the company's long-term growth sustainability in the telehealth industry arose as a result of these revenue challenges.
- The FDA's decision to remove semaglutide injection products from the shortage list could potentially lead to a decrease in demand for compounded versions, which might negatively impact Hims & Hers Health's revenue.
- The sudden removal of semaglutide injection products from the FDA's shortage list might have contributed to the telehealth giant's shares taking a tumble, with Hims & Hers Health's stock price decreasing by 23.35% following the announcement.
- The FDA's decision to crack down on companies manufacturing generic versions of semaglutide drugs, as a result of the FDA removing semaglutide injection products from the shortage list, could pose a significant threat to Hims & Hers Health's profitability, as they had been benefiting from the sale of these compounded products through their platform.
- The FDA's announcement of removing semaglutide injection products from the shortage list and their plans to regulate companies manufacturing generic versions of semaglutide drugs could raise concerns about Hims & Hers Health's long-term growth sustainability in the telehealth industry, as changes in their major revenue sources might affect their financial projections for investors.
