Telehealth Boom: Hims & Hers Surges, GLP-1 Shortages Drive Growth
Telehealth company Hims & Hers (HIMS) witnessed a significant surge of 24% in its stock value during Thursday trading, following the controversy sparked by its Super Bowl advertisement promoting affordable GLP-1 weight-loss treatments.
The advertisement criticized the healthcare system while introducing affordable weight-loss options, raising concerns regarding the safety and side effects of undisclosed drugs and their generic or branded nature. Industry players and congressional leaders responded, questioning the ad's lack of clarity.
Despite the controversy, the HIMS stock has skyrocketed by 100% year-to-date, climbing over $57 per share. This upswing coincides with the US Senate's approval of Robert F. Kennedy Jr. as the new Health and Human Services (HHS) secretary, primarily fueled by retail investor interest.
According to healthcare analyst Jared Holz, the appointment of Kennedy is expected to result in a lenient stance toward GLP-1 compounders, provided their products meet safety standards. He emphasizes the new administration's focus on cost-benefit analysis in the pharmaceutical industry, particularly preventive health measures.
The enthusiasm stems from ongoing concerns over GLP-1 shortages, with industry leaders Eli Lilly (LLY) and Novo Nordisk (NVO) investing heavily to ramp up production. During the shortage period, compounding pharmacies produced and sold patented products at lower prices, raising safety concerns but also attracting consumers to telehealth platforms like Hims and Ro, capturing an estimated 20% market share.
Lilly's partnership with Ro to provide drug vials rather than injectables has helped alleviate supply constraints. Despite the recent removal of Lilly's tirzepatide drugs (Mounjaro and Zepbound) from the FDA shortage list, concerns remain about the company's ability to meet current demand.
Novo's semaglutide drugs (Ozempic and Wegovy) remain on the FDA shortage list, despite the company's attempts to have them removed based on increased production. This has allowed telehealth providers like Hims and Ro to continue offering compounded products, despite the potential end of supply in the near future.