Regulatory and Legal Challenges Mount for Hims & Hers

Hims & Hers US4330001060

Telehealth provider Hims & Hers finds itself navigating a perfect storm of regulatory scrutiny and legal action, sending its stock into a steep decline. Since the start of 2026, the company's share price has been cut by more than half, pressured by two significant developments: a referral to the U.S. Department of Justice by the Food and Drug Administration and a patent infringement lawsuit from pharmaceutical giant Novo Nordisk. The core issues revolve around the marketing of low-cost, non-FDA-approved GLP-1 alternatives and the legal boundaries of pharmaceutical compounding.

Key Developments:
* Regulatory Action: The FDA has referred the company to the U.S. Department of Justice for potential legal violations.
* Legal Challenge: Novo Nordisk filed a patent infringement lawsuit on February 9.
* Market Sentiment: In January, approximately 65% of the company's available shares were sold short.
* Upcoming Event: The firm is scheduled to report quarterly earnings on February 23.

Market pessimism towards Hims & Hers has reached a notable peak. Data from Hazeltree indicates that short interest against the stock hit its highest level in at least a year during January, with nearly 65% of available shares borrowed for short selling?the most since October 2025. This bearish positioning intensified further, with LSEG reporting that short interest climbed to a record level by February 12.

Analysts link this activity to the company's growing vulnerabilities. Needham analyst Ryan MacDonald suggested to Reuters that the buildup is partly a reaction to the end of Hims & Hers' partnership with Novo Nordisk, which now leaves the telehealth firm as an external observer in the lucrative weight-loss drug market.

This negative sentiment was starkly reflected in the share price. According to investor relations data, the equity plummeted from $23.02 on February 6 to $16.30 by February 13. Trading on February 9 was particularly volatile, with volume surging to 144.2 million shares?a staggering 688% above its three-month average.

FDA Triggers DOJ Review Following Product Launch

The immediate catalyst for the sell-off appears to be regulatory. According to Mike Stuart, chief counsel for the U.S. Department of Health and Human Services (HHS), the FDA has referred Hims & Hers to the Department of Justice. This action was reportedly prompted by the company's brief launch in early February of a compounded version of Novo Nordisk's Wegovy drug, marketed at a cost of $49.

As reported by Reuters, the U.S. government could seek an injunction or pursue civil or criminal penalties. The central allegation is that the company may have violated the Food, Drug and Cosmetic Act by marketing an unapproved drug product. The DOJ's response will depend on whether it identifies a clear legal violation and on the fact that Hims & Hers withdrew the offering shortly after its introduction.

Company Withdraws Product Following FDA Warning

Hims & Hers pulled its affordable semaglutid pill from the market after the FDA announced on February 6 that it would take "decisive action" against providers of compounded GLP-1 products. The agency stated its intention to impose greater restrictions on the active pharmaceutical ingredients used for unapproved, mass-marketed alternatives to FDA-reviewed medications.

This move broadens the regulatory risk landscape. Scrutiny is expanding beyond mere marketing claims to encompass the entire supply and documentation chain for such compounded offerings.

Novo Nordisk Files Patent Lawsuit

Adding to the company's legal woes, Novo Nordisk initiated a patent infringement lawsuit on February 9. Reuters notes this marks the Danish company's first U.S. patent case against a "compounder" related to its Wegovy drug. Novo's chief legal officer, John Kuckelman, stated the lawsuit seeks "very substantial" monetary damages.

Hims & Hers publicly rejected the lawsuit's merits, framing it as an attack on Americans who rely on compounded medications. In a post on X, the company further argued that "Big Pharma" is leveraging the U.S. legal system to limit consumer choice.

A critical legal nuance will likely determine the case's outcome: whether the compounded products are sufficiently "personalized" to be permissible under federal law. Legal expert Nathan Beaver of Foley & Lardner told Reuters that the FDA might examine documentation, such as whether prescriptions are properly individualized and recorded.

All eyes are now on the upcoming earnings report scheduled for February 23. The release is expected to provide the first clear indication of how these intertwined legal and regulatory pressures are impacting customer demand, supply chains, and the company's forward-looking guidance.