By David Wainer

Stock in Hims & Hers Health was bound to tumble once it could no longer sell compounded versions of the weight-loss drug Wegovy at scale. But with lofty expectations about its remaining anti-obesity offering still baked in to the share price, more pain could be ahead.

Shares sank early Tuesday, a day after Hims said it would stop selling equivalents to Novo Nordisk's drug. That follows last week's ruling by the Food and Drug Administration that shortages of the medication had been resolved.

Even as Hims phases out mass-compounded semaglutide-the active ingredient in Wegovy-it still projects rapid weight-loss growth. Its outlook for 2025 includes some $725 million in weight-loss revenue, up from more than $225 million last year.

That looks challenging without compounded versions of Wegovy. Growth would mainly come from selling personalized compounded drugs, oral solutions and generic versions of liraglutide, an older and less effective Novo Nordisk product. Citi analyst Daniel Grosslight described the company's projections as "aspirational."

Even after their pullback, Hims shares remain up more than fourfold for the past 12 months. That leaves them looking vulnerable.

There is no denying the impressive trajectory at Hims-revenue surged 69% last year to $1.5 billion. But with continued sales growth now depending on an inferior product portfolio, more volatility seems inevitable.

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(END) Dow Jones Newswires

February 25, 2025 09:57 ET (14:57 GMT)

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