Regulatory Headwinds Cloud Growth Outlook for Hims & Hers

Hims & Hers US4330001060

Shares of the telehealth provider Hims & Hers faced significant selling pressure following the introduction of new legislative proposals in the United States. The sell-off, which saw the stock decline by 4.4%, stands in stark contrast to the positive performance of pharmaceutical giants Novo Nordisk and Eli Lilly. The market movement underscores investor concern over potential threats to one of the company's key growth drivers.

At the heart of the uncertainty is the "Safeguarding Americans from Fraudulent and Experimental (SAFE) Drugs Act of 2025." This draft legislation seeks to impose restrictions on the production of compounded versions of popular GLP-1 agonist medications used for weight management. For Hims & Hers, which markets these more affordable alternatives to branded drugs like Ozempic and Wegovy, the passage of such a law could deliver a direct blow to a central pillar of its business model.

Market sentiment is notably bearish, with short interest hovering around 31 percent, indicating a substantial cohort of investors are betting on further share price depreciation.

Financial Performance and International Diversification Efforts

Despite the regulatory challenges emerging in its domestic market, the company continues to post robust financial results and is actively expanding its international footprint. Third-quarter 2025 revenue grew 49% year-over-year to $599 million, while its subscriber base expanded to nearly 2.5 million customers. Management has reaffirmed its full-year 2025 revenue guidance, projecting a total between $2.34 billion and $2.36 billion.

Geographically, Hims & Hers is seeking growth abroad. The company has launched a comprehensive weight management program in the United Kingdom. Furthermore, its acquisition of Livewell has strengthened its position in the Canadian market, a strategic move timed ahead of the expected launch of a generic Ozempic there. Through its earlier purchase of Zava, the firm already maintains a presence in Germany, Ireland, and France.

Analyst Caution and Strategic Uncertainties

Wall Street analysts maintain a cautious stance, reflecting the heightened uncertainty. The average price target currently sits at $45.50, suggesting a potential upside of nearly 25% from recent levels. However, the wide dispersion of estimates—ranging from $30 to $85 per share—highlights a lack of consensus on the company's future trajectory.

Additional strategic questions remain unanswered. Discussions with Novo Nordisk regarding a potential partnership to distribute Wegovy are ongoing, but the company has acknowledged that an agreement may not be reached at all.

From a technical perspective, the equity trades significantly below its February peak of $68.74. Since hitting a 52-week high of $72.98, the stock has lost approximately half of its value. Whether the SAFE Act becomes law, and to what degree it might impact the company's operational model, are open questions. Until greater clarity emerges, investors should anticipate continued volatility in the share price.