HIMS Stock Plummets Amid Regulatory Probes
Shares of HIMS plummeted despite reporting 59% YoY revenue growth in 2025. The drop was triggered by an FDA action labeling its GLP-1 pill an "illegal copycat," which spurred a DOJ/SEC probe and a patent lawsuit from Novo Nordisk. In response, HIMS is pivoting internationally with a $1.15B acquisition of Eucalyptus.
The core of Novo Nordisk's lawsuit centers on U.S. Patent No. 8,129,343, which protects the chemical structure of the semaglutide molecule until December 2031. Novo Nordisk alleges that Hims' sale of a compounded pill containing semaglutide constitutes a direct infringement of this patent. The legal action seeks to permanently ban Hims from selling these unapproved compounded drugs and is also seeking monetary damages. The FDA's crackdown extends beyond Hims, targeting the broader market for mass-marketed compounded GLP-1 drugs. Regulators have explicitly stated that companies cannot claim their compounded products are generic versions of FDA-approved drugs or that they contain the same active ingredients and deliver the same clinical outcomes. The agency has warned that failure to correct these violations could lead to enforcement actions, including seizure and injunction, without further notice. This regulatory storm is hitting a key growth driver for Hims. The company's weight management programs, largely fueled by compounded GLP-1 medications, were projected to generate over $100 million in revenue by 2025. Hims' broader business model relies on a subscription-based telehealth platform for a variety of health and wellness needs, a model that has attracted over 2.5 million subscribers as of year-end 2025. The acquisition of Eucalyptus is a strategic pivot to diversify revenue and expand geographically. Eucalyptus is an Australian digital health company with operations in the UK, Germany, Canada, and Japan. The $1.15 billion deal will be paid in stages, with $240 million at closing, $710 million deferred over 18 months, and up to $200 million in performance-based earnouts. This move is intended to establish Hims as a global consumer health platform. Hims' technology platform is designed for scale, processing over 10,000 medical visits daily. It utilizes an AI-powered system called MedMatch to personalize treatment plans by analyzing millions of data points to optimize medication dosages and health outcomes. This infrastructure will be crucial as they integrate Eucalyptus's brands, such as Juniper and Pilot, and aim to scale their international operations. The SEC's investigation, disclosed in a 10-K filing, is focused on Hims' public statements and disclosures regarding its compounded semaglutide products and related business partnerships. The company has stated it is cooperating with the investigation but cannot predict the financial impact or timeline for resolution. This adds another layer of uncertainty as CEO Andrew Dudum has expressed confidence in the durability of their weight loss business, even in a "draconian scenario" where compounded GLP-1s are no longer available.
