Telehealth Stock Hims & Hers (HIMS) Surges on GLP-1 Drug Controversy and HHS Secretary Confirmation
Telehealth provider Hims & Hers (HIMS) witnessed a significant 24% stock surge during Thursday's trading session, fueled by the aftermath of a Super Bowl commercial promoting affordable GLP-1 weight-loss drugs. The ad sparked controversy as it criticized the healthcare system while omitting critical information about the specific drugs being referenced.
Concerns raised by congressional leaders and companies regarding the lack of safety disclosures within the advertisement failed to dampen investor enthusiasm. The stock has now gained over 100% year-to-date and continues to trade over $57 per share.
The surge follows the confirmation of Robert F. Kennedy Jr. as the US Health and Human Services (HHS) secretary by the Senate. According to Jared Holz, healthcare expert at Mizuho, the appointment has sparked optimism among retail investors.
Holz believes that "the RFK-led HHS will likely adopt a more lenient approach towards GLP compounders if the drugs are deemed safe." The incoming administration is reportedly prioritizing cost-effectiveness within the pharmaceutical industry, particularly in preventative health.
This optimism stems from ongoing concerns over GLP-1 shortages, with industry leaders Eli Lilly (LLY) and Novo Nordisk (NVO) investing heavily to increase production. Amidst the shortage, compounding pharmacies gained market share by producing patented drugs at lower prices, albeit with some safety concerns.
Hims and Ro, along with other telehealth platforms, have capitalized on the surge in demand, capturing an estimated 20% market share. A partnership between Lilly and Ro, involving the supply of vials rather than injectables, has helped alleviate supply constraints.
However, the FDA has recently removed Lilly's tirzepatide drugs from its shortage list, raising questions about the company's ability to meet demand. Novo's semaglutide drugs remain on the FDA's list, but the company expects increased production to lead to a removal request. This has allowed telehealth providers to continue offering compounded products.