In 2024, one of the most volatile U.S. stocks was Hims & Hers Health $Hims & Hers Health Inc.(HIMS)$ , a direct-to-consumer telehealth platform. In just six months, the company's stock went through several rounds of doubling and halving. At its peak, some even dubbed it the “Netflix of digital healthcare.” However, this Monday, the stock plunged 35% from recent highs. What kind of company is Hims & Hers, and why is its stock so volatile? More importantly—does its business model reflect real growth, or is it a speculative illusion?
Source: Gurufocus
What Does Hims & Hers Do?
Hims & Hers is a telehealth platform that connects patients with licensed medical professionals through virtual consultations, then sells prescription drugs directly to consumers. The platform focuses on chronic or lifestyle-related treatments such as weight loss, hair loss, skincare, sexual health, and mental health—typically involving long-term treatment plans. It operates on a subscription model, offering regular consultations and medication delivery tailored to individual needs. Over time, it has evolved from a simple virtual clinic to a more comprehensive, consumer-friendly healthcare platform.
Source: forhers.com
That said, the core of its business still involves repackaging medication and associated services into a monthly subscription. While this model offers convenience and simplified access to care, it may not fully justify the level of market excitement and valuation it once received.
The First Stock Surge: Riding the GLP-1 Wave
What truly sparked the company’s early 2024 boom was the platform’s entry into the GLP-1 weight loss drug market, combined with temporary regulatory tailwinds.
Over the past two years, GLP-1-based drugs like Ozempic and Wegovy from Novo Nordisk $Novo-Nordisk A/S(NVO)$ , and Zepbound from Eli Lilly $Eli Lilly(LLY)$ , became wildly popular due to their efficacy and endorsement from public figures like Elon Musk. However, this massive demand led to supply shortages in late 2023. During this period, the FDA allowed pharmacies and outsourcing facilities to compound substitute versions of these drugs if they were on the official drug shortage list—creating a temporary regulatory loophole.
Hims & Hers quickly capitalized on this. In late 2023, it began offering compounded semaglutide (the active ingredient in Ozempic and Wegovy) at just $199 per month—a fraction of the branded product’s price tag of $1,000+. This pricing strategy attracted cost-conscious consumers in droves, resulting in the company doubling its revenue in Q1 2024.
Compounded Semaglutide
The company further fueled growth by launching a $15 million Super Bowl ad titled “Sick of the System”, promoting its compounded version as a more affordable alternative. Following the campaign, website traffic surged 650%, and its app briefly ranked in Apple’s top 5. Riding this wave, Hims & Hers stock soared from around $25 to nearly $70.
Hims & Hers Super Bowl ad
But this rally was detached from fundamentals. As the FDA began to declare the shortages over, the compounding loophole began to close, and investors started to flee. The company’s stock plummeted, as the unsustainable regulatory arbitrage faded away.
Source: byrdadatto
The Second Surge: Announced Partnerships
To address concerns over sustainability, Hims & Hers pivoted. In April, it announced partnerships with Novo Nordisk and Eli Lilly, to offer branded GLP-1 drugs—Wegovy and Zepbound—through its platform.
The partnership with Novo Nordisk included direct access to all Wegovy dosage levels, supported and guided by the pharma giant. This move signaled a step toward a more sustainable business model, helping the stock rebound and nearly double again.
Source: hims& hers investor relations
However, the celebration was short-lived. Eli Lilly issued a public clarification, denying any formal partnership. It acknowledged that Hims & Hers could legally prescribe Zepbound, but emphasized that official partners like Ro Telehealth could offer lower prices.
Then, on Monday, Novo Nordisk abruptly terminated its partnership, accusing Hims & Hers of continuing to sell compounded versions even after shortages ended, marketing them misleadingly under “personalized” treatment labels. The drugs, Novo claimed, may contain active ingredients sourced from unapproved foreign suppliers, posing safety risks. Hims & Hers CEO denied these accusations, arguing that Novo tried to force the platform to exclusively promote Wegovy and compromise physician independence. The company insists it will continue offering weight loss solutions through other means. Still, the stock crashed 35% in a single day as trust eroded.
Source: CNBC
Is It Time to "Buy the Dip"?
At this point, the two key narratives that drove past rallies have both unraveled:
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Low-cost compounded drugs from policy loopholes are no longer viable.
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Strategic pharma partnerships have broken down or been publicly challenged.
Without these pillars, Hims & Hers now faces:
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Product differentiation and pricing power challenges.
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Increased compliance risk tied to compounded drugs.
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Stiffer competition from rivals like Ro, which has formal partnerships and price advantages.
Moreover, the allegations surrounding unapproved drug sourcing may tarnish consumer perception. Even though the platform’s past marketing has been effective in driving user growth, future user retention and product availability remain highly uncertain.
Unless the company can once again secure competitively priced, compliant weight loss products, its ability to sustain growth appears questionable. For investors, “buying the dip” now may be premature, and it’s advisable to wait and observe how the company navigates the next few quarters in terms of user retention, growth metrics, and new product rollouts.
Invesight Viewpoint
Hims & Hers owes its rapid rise to savvy marketing and impeccable timing with both policy shifts and consumer trends. But with those tailwinds fading, it now faces a much tougher test: can it transition from a hype-driven platform into a trusted, compliant digital health provider with long-term product and pricing power?
Whether the current plunge represents a buying opportunity depends entirely on its ability to offer differentiated, competitive, and FDA-compliant products. Betting on short-term rebounds would be speculative. Investors should instead closely monitor the company’s user data, strategic pivots, and product partnerships over the coming quarters before making any moves.
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