Hims & Hers Health Shares Drop After FDA tirzepatide Resolution

Shares of Hims & Hers Health, Inc. (NYSE: HIMS) declined sharply by 15% following the U.S. Food and Drug Administration's (FDA) announcement regarding the resolution of the tirzepatide injection shortage.

The FDA's recent decision, announced on December 19, 2024, concludes a phase where select pharmacies were permitted to compound, distribute, or dispense the drug without facing penalties linked to its shortage status.

This re-evaluation reverses the FDA's prior statement from October 2, 2024, which indicated that the tirzepatide shortage had ended. The agency granted grace periods until February 18, 2025, for state-licensed pharmacies and until March 19, 2025, for outsourcing facilities to continue compounding the drug. Importantly, the FDA cautioned that it might take action against other statutory or regulatory violations, which could encompass issues involving substandard quality or unsafe products.

Market reactions reflect concerns about the implications for Hims & Hers Health, which, similar to companies like WW International (NASDAQ: WW), has been providing compounded versions of obesity medications such as Novo Nordisk (NYSE: NVO)'s Wegovy (semaglutide). The FDA continues to classify semaglutide and other GLP-1 products as being in shortage, with varying availability indicated by manufacturers.

Investors were attentively watching the FDA's status report concerning Eli Lilly (NYSE: LLY) & Co’s sought-after compound, tirzepatide, anticipating updates on December 19. Previously, the FDA had removed tirzepatide from the shortage list in October but agreed to reassess after a lawsuit from a trade association for compounding.

The FDA's latest ruling could alter the market landscape for obesity drugs, as compounded versions were sanctioned under U.S. regulations during the shortage. Today's stock movement for Hims & Hers Health is a direct reflection of the FDA’s announcement, signaling the conclusion of a beneficial era for the company’s compounded drug offerings.

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