Shares of Hims & Hers Health Inc. (HIMS) plummeted over 18% in after-hours trading on Monday, despite reporting better-than-expected Q4 revenue and earnings that met estimates. The telehealth company's stock tumbled after it warned that the FDA's decision to declare an end to the shortage of Novo Nordisk's weight loss drugs Wegovy and Ozempic could constrain its ability to offer compounded versions of these drugs on its platform.

Hims & Hers had been selling legal knockoffs of Novo's weight loss drugs at significantly lower prices through compounding pharmacies while the drugs were in shortage. With the FDA removing the drugs from its shortage list, these compounding pharmacies will need to stop producing the compounded versions by May 22. This could severely impact Hims & Hers' weight loss drug business, which has been a key growth driver.

While the company believes there may be paths to continue offering compounded weight loss drugs after the shortage ends, such as through personalized dosing, it cannot guarantee it will be able to offer these products "in the same manner, to the same extent, or at all." This uncertainty has spooked investors, leading to the steep sell-off in Hims & Hers' shares despite its strong Q4 performance and upbeat outlook for 2025 revenue and adjusted EBITDA.