Hims Has No Way Out of Their $725 Million Hole
Compounding's banned. No branded alternatives. Patent reality bites.
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Hims & Hers is officially a meme stock. In the past year alone, the shares have swung more than 5% on 94 separate occasions, making it more volatile than Donald Trump's X posts.
Browse r/wallstreetbets for five minutes or scroll through investor threads on X and you'll find bullish cheerleaders hyping every crumb of good news alongside bearish pessimists declaring the company's doom.
But to understand what's really happening, you have to ignore the noise and examine what drove the Hims-Novo breakup. Most analysts are missing the real, juicy story.
The $725 Million Promise
Investors care about one thing above all others. Hitting projections. On the Q4 2024 earnings call, CFO Yemi Okupe confidently promised $725 million weight-loss revenue in FY2025. Now, the pressure is on to deliver.
With mass-produced compounded semaglutide banned—though personalized dosing remains a grey area (more on the implications of this personalized dosing loophole later)—Hims has to find $725 million somewhere else.
Many investors (myself included) assumed that branded Wegovy was going to save the day through the NovoCare partnership.
I mean, the stock surged nearly 15% and added $1.4 billion in market cap because the deal signalled legitimacy and a realistic path to diversify away from compounded semaglutide.
In hindsight, that assumption was overly optimistic and a bit naive because I got swept up in the hype without thoroughly vetting the underlying economics.
Fair. Lesson learned.
Doomed From the Start
According to Cedar Grove capital management, a one-month compounded semaglutide dose generated about $259 per month in gross profit, while the longer subscription plans yielded lower monthly gross profits.
Clearly, Hims is making a shit load of money selling compounded semaglutide.
To match those profits under NovoCare, Hims would need 1-3.2x more customers, since branded Wegovy costs 1.5-3.6x more than compounded versions. Basically, you're asking more people to pay more for the same product.
It’s not impossible, but also consider this.
NovoCare offered Wegovy for $100 cheaper directly through their own website ($499), instead of going through Hims.
Meanwhile, LillyDirect priced Zepbound at $349/month, 30% cheaper than NovoCare, and about ~42% cheaper than Hims, all for a much more effective drug that averages ~20% weight loss.
This means customers had two straightforward paths to save money or achieve faster results. Hims leadership probably took one look at the data and decided the NovoCare partnership would never carry them all the way to $725 million.
The numbers didn’t add up.
Meanwhile, Novo assumed compounded semaglutide would quietly fade to the fringes as Wegovy took center stage. Equally naive.
What Really Happened
Novo looked at their first month's sales figures and started scratching their heads, wondering why the hell Wegovy wasn’t catching on.
All the while, Hims was quietly funnelling customers toward personalized compounded doses through their async consultation and chasing the $725 million revenue while leaving Novo stuck on the sidelines.
You can almost picture their leadership team, absolutely fuming when they figured it out. At that point, what else could Novo do but rip up the partnership agreement.
The Loophole Strategy
The critical distinction right now is that mass-produced compounded doses identical to Wegovy are banned, but personalized dosing remains legal under the 503A law. Doctors can prescribe tailored doses for individual patients to help manage specific side effects or to customize how patients take the medication, like in pill form, liquid drops placed under the tongue, or different injection strengths.
Andrew Dudum, Hims CEO, is exploiting this loophole brilliantly.
Nearly half of semaglutide patients experience GI side effects, so Hims argues their prescribers are clinically justified in offering personalized dosing.
To further add weight to his claim, Andrew recently tweeted results from a recent internal study with over 90,000 patients showing personalized dosing boosted retention compared to traditional commercial dosages.
90,000.
That's a huge number of people on personalized dosing.
Mass-prescribing a personalized patented drug is crossing the line into IP infringement when done in large quantities like Hims are doing.
That's the smoking gun.
Until now, investors never really knew how many people were receiving personalized compounded doses. 90,000 patients suggests mass-scale prescribing that will raise red flags with regulators and Novo's legal team.
The question is, are HIMS going to continue doing it? The answer is hell yes.
No Other Viable Alternatives
HIMS is stuck. They are the only large telehealth provider with no branded GLP-1s. And there alternatives do not provide a suitable fix.
There’s roughly a 0% chance liraglutide, a daily injection that's both pricier and noticeably weaker than semaglutide, is going to magically fill that gaping $725 million revenue hole.
As Cedar Grove CIO, Paul Cerro, pointed out, compounded semaglutide generated only ~$230M over 7.5 months despite non-stop ads. It would take some kind of miracle for liraglutide to achieve even these figures.
So we can safely assume its not happening.
Oral weight loss kits start at around $69 to $79 per month, but deliver only around 10% weight loss on average, far less than injectable GLP-1 options like Wegovy. Sure, some people might try them as a cheaper alternative or as an off-ramp from injections, but relying on them as a primary weight-loss driver at large scale just doesn’t seem realistic either.
This means the only logical conclusion is that Andrew is going to continue compounding until a cease and desist letter slaps bang on his desk. The flood of new compounded semaglutide ads suggests he's doubling down.
Curious Inaction
You might be wondering why Novo hasn't taken stronger action yet.
Where is that famous Viking rage that should've sent chills down the spines of Hims leadership? Well, they've already made a few strategic moves. They partnered with Weight Watchers to offer branded Wegovy for just $299 a month—clearly attempting to undercut compounded prices and pull customers away.
Remember, Novo has the muscle to partner with multiple D2C brands, aggressively pricing branded Wegovy to weaken Hims.
But the bigger move—a patent infringement lawsuit—remains uncertain.
Filing suit would be the nuclear option, potentially obliterating Hims altogether. Just imagine the scale of damages, the crushing legal costs, and devastating reputational fallout. A loss in court could permanently shut Hims out of selling GLP-1s, collapsing their entire weight-loss segment.
Could Hims realistically fill that massive hole with HRT, TRT, ED, or skincare alone?
My Prediction
This is now a high-stakes game of chicken. Andrew is gambling that Novo won't escalate to legal warfare, betting he can continue exploiting the personalized dosing loophole long enough to find another path to $725 million.
But honestly, I can't take Novo seriously anymore if they don't act. They've had a string of miscalculations: the botched Canadian patent situation, getting flat-footed against Lilly's aggressive pricing, and recently getting embroiled in an obesity advertising scandal in Spain. At some point, a company has to stop stumbling and start executing decisively.
The question isn't if, but when they'll be forced to act.
Thanks Ashwin for the insightful breakdown! HIMS stock has been a roller coaster for sure. The volatility reflects an entire industry in flux as they navigate an uncertain regulatory landscape.
1) What do you think of other ways to get around the personalized dosing loophole, e.g. adding vitamin B12 or other supplements to the compounded meds?
2) Do you see other telehealth companies offering compounded GLP-1s adopting a similar approach to HIMS (i.e. keeping their compounded offerings on the market and risking patent litigation)?
Thanks for reading, Daniel.
1. Compounding supplements is certainly interesting. Companies that do this are walking the regulatory tight rope and building a house of cards imo.
2. No. Noom and Ro etc have got partnerships with Lilly and they have said outright they will not tolerate companies selling compounded products. I also think they’re watching and waiting to see what happens with HIMS