By Katherine Hamilton

Hims & Hers's addition of obesity drug Zepbound won't do much to bolster its weight-loss business, analysts say.

Shares of the telehealth platform fell as much as 6.8% on Wednesday following the announcement it would offer a branded version of Eli Lilly's Zepbound. The stock, which has lost 28% of its value in the past month, was down 0.6% to $30.85 in early-afternoon trading.

Hims & Hers has been selling a compound GLP-1 for around $165 a month, but will now offer the brand-name Zepbound for around $1,900 a month. Investors worry patients won't make that price leap and that Hims, which has built its business on affordable healthcare, will struggle to meet its revenue goal.

"It's probably unlikely that a compounded GLP-1 customer at Hims that's paying $165 per month is going to transition to paying $1,900 per month for the fully branded," Needham analyst Ryan MacDonald said. "There's a question about how achievable the weight-loss revenue guidance is for 2025."

Other pharmacies like CVS and Walmart offer the drug at around $1,000, Truist analyst Jailendra Singh said in a note, while Eli Lilly sells it to self-paying customers starting at $349. With insurance, it can cost as little as $25.

Hims & Hers is trying to figure out how to maintain a strong weight-loss portfolio after the Food and Drug Administration said obesity treatments including Ozempic and Zepbound were no longer in a shortage.

When these treatments were scarce, startups like Hims could use their active ingredients to produce and sell compound versions, and that significantly bolstered the startup's revenue. Companies can no longer make compound versions now that the shortage is over, putting pressure on Hims to find affordable alternatives for patients.

Companies that had sold compound weight-loss drugs during the shortage have had about two months following the FDA's February announcement to switch customers over to non-compound versions. That time frame is just about up, and it's unclear whether Hims has enough affordable alternatives to hold on to the customers it has accrued over the past two years.

Hims has said its compound products have sold well, but hasn't given much insight into how its branded products have done so far, Leerink analyst Michael Cherny said.

"Hims's recent success within weight management has been in selling low-price drugs," Cherny said. "That's how their revenue and profit growth has been generated."

During this year's Super Bowl, Hims aired a commercial criticizing how expensive medications are and touting its own affordable weight-loss drugs. That message has resonated with its customers, who are often uninsured or underinsured, Cherney said.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

April 02, 2025 12:53 ET (16:53 GMT)

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