Hims & Hers Health Inc. (NYSE: HIMS) saw its stock fall 6% on Tuesday following the release of a warning letter from the US Food and Drug Administration (FDA) concerning marketing claims related to its compounded semaglutide products.
The FDA cited the telehealth company for making statements on its website that were “false or misleading,” including claims that its products were “weekly injectable GLP-1 with the same active ingredient as Ozempic and Wegovy” and contained “clinically proven ingredients.”
In the warning letter, dated September 9, the agency emphasized that compounded drug products are not FDA-approved, and Hims & Hers’ statements implied equivalency to FDA-approved medications, which is not accurate.
The FDA noted that such claims violate sections of the Federal Food, Drug, and Cosmetic Act.
Hims & Hers has been given 15 working days to respond, detailing the steps it will take to address the violations.
Failure to adequately address the issues could result in legal actions, including seizure of products or injunctions.
Rising regulatory scrutiny in weight management market
Semaglutide, the active ingredient in popular weight loss and diabetes drugs Ozempic and Wegovy, has seen soaring demand, prompting some telehealth providers to offer compounded versions as alternatives.
Hims & Hers’ offering of compounded semaglutide products came under scrutiny amid this surge in popularity.
The FDA has increasingly focused on companies marketing non-FDA-approved GLP-1 medications, reflecting broader regulatory attention in the weight management sector.
The warning to Hims & Hers comes months after Novo Nordisk (NYSE: NVO) terminated its collaboration with the telehealth firm, citing concerns over illegal mass compounding and deceptive marketing practices.
Novo Nordisk said direct access to weight-loss drug Wegovy will no longer be available through Hims & Hers Health after regulators said the company was illegally mass-selling compounded drugs under the guise of personalization and using deceptive marketing that risked patient safety.
These developments underscore the regulatory challenges facing telehealth companies attempting to capitalize on the growing demand for GLP-1-based treatments, which include both weight loss and diabetes management therapies.
Market reaction and investor concerns
Shares of Hims & Hers responded sharply to the news, falling 6.63% to $50.38 in afternoon trading.
The stock has fallen over 21% since Novo Nordisk ended its partnership with the company.
Despite this, the Him & Hers shares are up 99% in the year.
The decline reflects investor concerns over potential legal repercussions and reputational damage, as well as the uncertainty surrounding the company’s ability to address the FDA’s concerns within the specified timeframe.
The FDA’s warning highlights the delicate balance telehealth providers must maintain when promoting compounded versions of popular medications.
Investors will be closely monitoring Hims & Hers’ response, as the company navigates regulatory compliance in a competitive and rapidly evolving telehealth and weight management market.
With the heightened scrutiny of compounded semaglutide products and ongoing investor concerns, the coming weeks will be critical for Hims & Hers in demonstrating compliance and rebuilding confidence in its business practices.
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