Hims & Hers Shares Face Regulatory and Strategic Crossroads

Hims & Hers US4330001060

The stock of telehealth provider Hims & Hers encountered significant selling pressure on Wednesday. This movement comes amid a dual narrative: a strategic business expansion into the United Kingdom and the introduction of new U.S. legislation that directly challenges a core segment of its domestic operations.

Driving the market's negative sentiment is the bipartisan "SAFE Drugs Act of 2025," introduced in Congress on Wednesday. Sponsored by Representatives Rudy Yakym III and Andre Carson—both from Indiana, where Eli Lilly is headquartered—the bill aims to impose stricter regulations on compounding pharmacies that produce versions of popular weight-loss medications.

Analysts at Citi view this legislative move as a substantial headwind for the company. The proposed law would "significantly restrict Hims's ability to compound GLP-1 medications," the very product category that fueled the firm's strongest revenue growth last year. Historically, compounding pharmacies could sell replica versions when drugs were on the FDA's shortage list. Even after Eli Lilly and Novo Nordisk had their GLP-1 drugs removed from that list, these pharmacies continued to market compounded versions as "personalized" treatments. The new act would require physicians to demonstrate that a compounded alternative offers a "significant difference" from the branded product.

Expansion into the UK Marks a Strategic Pivot

Concurrent with the regulatory news, Hims & Hers launched a comprehensive weight management program in the United Kingdom. This initiative also marks the debut of its "Hers" women's health platform in the British market. The offering will include branded medications such as Novo Nordisk's Wegovy and Eli Lilly's Mounjaro, alongside the over-the-counter weight-loss drug Orlos. Wegovy will be available from £149 (approximately $198) per month with a one-year commitment.

This geographical and operational expansion is built upon the earlier acquisition of Zava, a London-based telehealth provider with operations in the UK, Germany, France, and Ireland. Notably, the UK strategy diverges from the U.S. model by relying on original pharmaceuticals from manufacturers, rather than the compounded versions that form a significant part of its American business.

Analyst Sentiment Remains Mixed

The investment community presents a divided picture. Despite the regulatory uncertainty, Barclays initiated coverage on Monday with an "Overweight" rating. Earlier, on December 4, Leerink Partners upgraded the shares from "Hold" to "Strong Buy." However, a broader look reveals caution: out of 17 analysts covering the stock, ten maintain a "Hold" rating, while three advise selling. The consensus average price target currently stands at $45.50.

The company's latest financial results showed robust top-line growth but an earnings miss. For the third quarter of 2025, Hims & Hers increased revenue by 49% to $599 million, yet fell short of profit expectations, reporting $0.06 per share against forecasts of $0.09. Its subscriber base grew to nearly 2.5 million.

Navigating a Critical Juncture

The company is navigating a pivotal strategic phase. Its UK foray demonstrates an ability to operate effectively with branded medications, presenting a potential model for sustainable growth that is less reliant on the regulatory gray area of compounded drugs. In a related development, the firm is engaged in discussions with Novo Nordisk about a potential partnership to reintroduce the original Wegovy to its U.S. platform.

The coming months will be crucial for Hims & Hers as it balances these parallel narratives of growth and regulatory risk. Investors are likely to watch closely for the next quarterly results, expected in early February 2026, for further clarity on the company's trajectory.