Regulatory Proposal Sparks Volatility for Hims & Hers Shares

Hims & Hers US4330001060

Shares of the telehealth provider Hims & Hers Health came under selling pressure Wednesday following the introduction of bipartisan legislation that could significantly curtail its lucrative business in compounded weight-loss medications. The stock declined 4.4% on the news. In a contrasting development the same day, Barclays initiated coverage of the company with a bullish "Overweight" rating, highlighting the conflicting signals currently surrounding the equity.

Despite the looming regulatory concerns, Barclays analysts commenced their coverage on December 10 with a positive outlook, expressing confidence in the firm's longer-term growth trajectory. This stance adds to a divided analyst consensus. According to data from MarketBeat, the average rating currently stands at "Hold," accompanied by a price target of $45.50. Earlier in December, Leerink Partners upgraded the stock to a "Strong-Buy" recommendation.

Bipartisan Bill Targets Compounded Drug Market

The source of the market's concern is the "Safeguarding Americans from Fraudulent and Experimental (SAFE) Drugs Act of 2025." This cross-party legislative draft was put forward on December 10 by Representatives Rudy Yakym, a Republican, and André Carson, a Democrat. Both lawmakers represent Indiana, the home state of pharmaceutical giant Eli Lilly, which has been engaged in a protracted dispute with compounding pharmacies over copycat versions of GLP-1 drugs.

The proposed law aims to substantially restrict the production of imitation versions of approved pharmaceuticals. It would most directly impact the sought-after GLP-1 agonists used for weight management, which have recently emerged as a primary growth driver for Hims & Hers. Analysts at Citi have warned that the draft legislation could "significantly limit the company's ability to produce GLP-1 preparations."

Key provisions within the draft legislation include:
* A stricter definition of "essentially a copy" to prevent mass compounding.
* A mandatory reporting requirement for pharmacies filling more than 20 interstate prescriptions for a compounded drug.
* Endorsement from patient advocacy groups, including the American Diabetes Association.

The U.S. Food and Drug Administration (FDA) has already collected over 1,000 reports of adverse events linked to compounded GLP-1 medications. These reports cite issues such as dosage errors and problems stemming from unregulated ingredients sourced from abroad.

Established Pharma Firms See Gains

As shares of Hims & Hers retreated, the manufacturers of the original, branded drugs traded higher. Novo Nordisk shares advanced 6.2%, while Eli Lilly gained 1.3%. The market movement suggests investors anticipate that stricter regulations on copycat products would benefit the established pharmaceutical companies.

Company Continues International Push

Also on December 10, Hims & Hers announced the launch of its weight management program in the United Kingdom. The offering provides customers with access to physician-supported solutions, including the original branded medications Mounjaro and Wegovy, alongside over-the-counter alternatives. This follows the company's early December expansion into the Canadian market through its acquisition of the Livewell platform.

Financially, Hims & Hers reported strong third-quarter results for 2025, with revenue surging 49.2% to $598.98 million, exceeding expectations. However, earnings per share of $0.06 fell short of forecasts. In a move often interpreted as a sign of management's belief that shares are undervalued, the board authorized a new $250 million stock repurchase program in mid-November.

Path Forward and Investor Considerations

The SAFE Drugs Act must now navigate the full legislative process, and its ultimate passage—and final form—remain uncertain. The company's next quarterly results are anticipated for late February or early March 2026. This report will likely provide insight into how management is assessing the regulatory risks and whether the pace of international expansion can offset potential pressure on U.S. operations. Trading well below its 52-week high of $72.98, the stock's current price appears to reflect a substantial degree of investor apprehension.