Justin Pope, The Motley Fool

Fri, Jun 27, 2025, 1:53 AM5 min read

• Novo Nordisk is feuding with Hims & Hers Health over the latter's sale of compounded versions of Wegovy.

• Hims & Hers Health's business spans well beyond weight loss drugs, but the fallout of this could damage the company's reputation.

• A wide range of outcomes makes evaluating the stock more challenging now.

• 10 stocks we like better than Hims & Hers Health ›

Up-and-coming telehealth company Hims & Hers Health (NYSE: HIMS) has capitalized on the weight loss drug craze to become one of the market's top performers over the past few years.

However, recently, pharmaceutical giant Novo Nordisk, the maker of popular GLP-1 agonist weight loss drug Wegovy, terminated its sales partnership with the company due to its continued efforts to sell compounded semaglutide, the patented active ingredient in Wegovy.

The stock tumbled over 30% on the news, but is still up nearly 100% over the past year. Will Hims & Hers recover, or is this the beginning of the stock's troubles?

Here is what you need to know.

Wegovy is a popular weight loss drug, a type of GLP-1 agonist, that helps patients lose weight by slowing digestion and suppressing their appetite. It was so popular that Novo Nordisk couldn't keep up with demand, and regulators declared a shortage from 2022 to earlier this year.

During a drug shortage, healthcare providers can prescribe compounded versions of medications. Compounding involves producing customized versions of a mass-produced drug, typically intended for uncommon circumstances. For example, a patient may experience severe side effects from the commercially available dosage and need a custom dose.

Hims & Hers began selling compounded semaglutide (Wegovy) in May 2024, which has helped fuel the company's success over the past year. The semaglutide shortage ended in February, after which compounding was supposed to cease, except in the rare instances where compounding has traditionally helped patients. In April, Novo Nordisk partnered with Hims & Hers to provide direct access to Wegovy to the telehealth company's patients.

However, Hims & Hers has continued to sell compounded semaglutide on the basis that patients still require personalized treatments. CEO Andrew Dudum recently posted on X that the company had conducted a study of over 90,000 participants using personalized GLP-1 treatments, though he didn't provide any sources. Novo Nordisk, arguing that Hims & Hers is abusing compounding as a loophole to bypass its patent, terminated the sales agreement.