Hims & Hers stock crashes 32% after Novo Nordisk terminates partnership over alleged GLP-1 knockoff sales
Jun 24, 2025
Key Points
- Novo Nordisk terminated its partnership with Hims & Hers after discovering the telehealth platform was steering patients toward cheaper compounded GLP-1 knockoffs instead of branded Wagovy, sending Hims stock down 32% in its largest single-day decline.
- Hims had leveraged Novo's brand to acquire customers at scale, then pitched them on higher-margin compounded alternatives, a bait-and-switch that became economically untenable for the drug maker losing market share.
- The partnership collapse introduces regulatory uncertainty for Hims, which generated $586 million in revenue but now faces potential FDA restrictions on compounded GLP-1 production that could reshape its business model.
Summary
Novo Nordisk terminated its partnership with Hims & Hers on Monday, citing safety concerns about compounded GLP-1 versions and accusing the telehealth company of deceptive marketing. Hims countered that Novo was pressuring it to recommend Wagovy regardless of whether it was the best option for individual patients. The split sent Hims stock down 32% in a single day, its largest decline on record.
The core conflict stems from how Hims operated the partnership. Novo built a massive distribution advantage through the telehealth platform, using it to acquire customers at scale. Once customers arrived, Hims pitched them on cheaper compounded alternatives, essentially leveraging Novo's brand to funnel patients into higher-margin knockoff products. For a drug maker watching its branded products lose market share to lower-cost competitors, the economics became untenable.
Novo and Hims had announced the partnership just two months earlier in April 2025 as a long-term collaboration to distribute Wagovy directly through Hims' platform. The rapid collapse underscores how fragile these drug-maker-to-telehealth agreements can be when incentives diverge.
Hims' underlying business remains strong. The company generated $586 million in revenue in its most recent period, up 111% year-over-year, with 2.4 million subscribers. Operating margin improved from negative 40% at IPO to positive 6.5%. The stock is up 3-4x from the original SPAC price, making it one of the better-performing SPACs.
The Novo rupture introduces regulatory and competitive uncertainty. The larger question is whether the FDA will move to restrict compounded GLP-1 production, a move that could reshape Hims' business model. CEO Andrew Dudum said the company will continue to offer Wagovy and other treatment options, but losing the direct partnership with the market leader weakens Hims' leverage in the category.