Regulatory Headwinds and Overseas Growth: The Dual Narrative for Hims & Hers

Hims & Hers US4330001060

The investment case for telehealth provider Hims & Hers is currently defined by two opposing forces. While a proposed U.S. law threatens a key revenue stream, the company is simultaneously launching a major expansion in the United Kingdom, creating a complex landscape for shareholders to navigate.

On December 10, 2025, Hims & Hers officially introduced its comprehensive weight management program and "Hers" platform in the United Kingdom. This move taps into a substantial addressable market, with company data indicating 64% of UK adults are classified as overweight or obese.

The service is structured as a subscription model offering continuous medical support. Key components of the new UK offering include:

• Brand-Name GLP‑1 Medications: Access to established pharmaceuticals such as Wegovy (Novo Nordisk) and Mounjaro (Eli Lilly).
• Oral Treatment Options: Non-prescription alternatives like Orlistat (marketed as Orlos).
• Holistic Care: Round-the-clock clinical teams and lifestyle support covering nutrition, sleep, and exercise.
• Pricing: Subscription plans begin at £149 per month with an annual commitment.

Strategically, this European foray relies on original, branded drugs rather than the compounded alternatives that have fueled recent growth in the U.S. market. This establishes a distinct operational approach within the lucrative weight-loss sector, underpinned by a different regulatory framework.

Mounting Pressure from Proposed U.S. Legislation

The source of recent market skepticism is the "SAFE Drugs Act of 2025," a bill introduced by U.S. lawmakers. This legislation specifically targets the compounding pharmacy sector—a business line that has recently emerged as a significant growth driver for Hims & Hers.

The draft law aims to restrict the marketing and distribution of compounded versions of high-revenue weight-loss drugs, notably composite GLP‑1 formulations. These alternatives, based on active ingredients like semaglutid, have served as a lower-cost option compared to branded products like Ozempic or Wegovy, driving recent revenue momentum.

The prospect of stricter regulations has shifted focus to the risks within the company's U.S. business model, overshadowing other positive developments and prompting a market reassessment. The current share price of €31.94 sits notably below the 50-day moving average of €36.62, reflecting this recent pressure.

Diverging Signals: Analyst Confidence and Insider Activity

Professional market analysis presents a more nuanced view than the short-term stock reaction. Barclays initiated coverage of the equity on December 10 with an "Overweight" rating. The analysts emphasized strong fundamental performance, noting that Hims & Hers delivered year-over-year revenue growth of 49.2% in the third quarter, reaching $598.98 million.

However, activity from company insiders sends a contrasting signal. Regulatory filings show that board member Andrea Perez Garcia sold approximately 2,500 shares on December 9, 2025, at an average price of $39.17, realizing nearly $98,000. This transaction occurred just before news of the legislative proposals and the subsequent share price decline. While the company has an authorized share repurchase program of $250 million, insider sales are often interpreted by retail investors as a sign of caution, even if they do not necessarily reflect a negative outlook on operational performance.

Valuation in a Shifting Landscape

These recent fluctuations are occurring amid a macroeconomic backdrop that should theoretically provide support. The U.S. Federal Reserve cut its benchmark interest rate by 25 basis points on December 10, a move typically favorable for growth-oriented stocks. While indices like the Russell 2000 have benefited and reached new highs, Hims & Hers has decoupled from this trend, primarily due to the specific regulatory risk associated with the "SAFE Drugs Act."

The market is now weighing two divergent narratives: the near-term pressure on the U.S. compounding business against the long-term growth potential from the UK launch with branded medications. This uncertainty is clearly priced in. Trading noticeably below the original listing price of approximately $37.88 per share, the stock also sits well under average analyst price targets ranging from $45.50 to $50.00. This discount suggests the market is pricing in risks, including a more pessimistic regulatory outcome.

The coming months will likely focus on the scaling velocity of the UK business and the final form of U.S. legislation. These factors will determine whether the current valuation represents a cautious discount or an appropriate reflection of a permanently altered risk profile.