Hims & Hers Built a GLP-1 Growth Machine. The Problem Is the Shortage Ended.
By Stocktrade Wire
3 min readUpdated March 24, 2026
Editorial report. Primary sources are listed at the end of this page.
Hims & Hers Health became one of the market’s biggest telehealth winners by riding the GLP-1 wave.
The company originally built its business around direct-to-consumer treatments for erectile dysfunction, hair loss, and other subscription-based telehealth categories. But in 2024, growth accelerated dramatically as HIMS entered the compounded GLP-1 market while semaglutide drugs remained on the FDA shortage list.
The impact on the business was immediate.
Revenue growth accelerated from roughly mid-40% levels to over 100% by early 2025. EBITDA expanded sharply. The stock surged as investors increasingly viewed HIMS as one of the largest retail beneficiaries of the GLP-1 boom.
But much of that growth came from a temporary market condition: the FDA shortage.
When semaglutide drugs are officially listed as being in shortage, compounders are permitted to manufacture versions of those drugs under specific regulatory carveouts. Once the shortage ends, those protections largely disappear.
That transition is where the story becomes more complicated.
The Core Debate
The bullish thesis on HIMS is straightforward:
- massive consumer demand for weight-loss drugs
- strong direct-to-consumer brand
- subscription model
- expanding treatment categories
- large telehealth market opportunity
The bearish thesis is more structural: what happens when compounded GLP-1 economics normalize?
The FDA declared the semaglutide shortage resolved in 2025, giving compounders a transition period to wind down production. HIMS continued aggressively offering compounded products even as several competitors reduced exposure or exited entirely.
That eventually led to public conflict with Novo Nordisk.
Novo Nordisk Became the Central Risk
In 2025, Novo and HIMS announced a partnership intended to transition customers from compounded semaglutide toward branded Wegovy.
But tensions escalated shortly afterward.
Novo later terminated the arrangement and publicly accused HIMS of continuing to prioritize compounded offerings while litigation pressure increased across the industry. Novo subsequently filed patent-related claims tied to compounded semaglutide products, including oral formulations announced by HIMS.
The important issue is not simply legal risk.
The larger issue is economics.
The Economics of the Transition Matter
Compounded GLP-1 products appear to carry substantially higher margins than branded drug partnerships.
If customers transition toward officially branded GLP-1 drugs, gross profit per subscriber may compress materially.
Simplified economics comparison
| Product type | Estimated ARPU | Estimated gross margin | Approx. gross profit per user |
|---|---|---|---|
| Compounded GLP-1 | ~$235/month | ~65% | ~$153 |
| Branded partnership model | Similar pricing | Lower economics | Materially reduced |
The concern among bears is that investors may still be valuing HIMS using profitability assumptions built during peak compounded GLP-1 economics.
If those economics normalize, future estimates could prove too optimistic.
Competition Is Also Increasing
The telehealth industry has relatively low barriers to entry.
As profitability expanded across categories like:
- hair loss
- erectile dysfunction
- GLP-1s
- testosterone
- hormone therapy
competition surged.
Customer acquisition costs increased as newer telehealth platforms aggressively bid for the same online traffic and keywords.
Meanwhile, branded pharmaceutical companies also became more aggressive on pricing. Novo lowered cash-pay Wegovy pricing significantly through direct channels and broader affordability initiatives. In some cases, branded pricing reportedly approached or undercut compounded alternatives.
That changes the landscape meaningfully.
Growth May Become Harder to Sustain
One of the key arguments from bears is that HIMS’ non-GLP-1 core business may already be slowing materially beneath the surface.
The company also completed acquisitions during this period, including Zava and Eucalyptus, which critics argue may obscure underlying organic growth trends.
Whether that concern proves valid will likely become clearer over the next several quarters as:
- compounded GLP-1 transitions continue
- branded partnerships scale
- acquisition contributions normalize
- customer acquisition costs stabilize
Key questions going forward
| Question | Why it matters |
|---|---|
| Can branded GLP-1 partnerships offset margin compression? | Determines long-term profitability |
| Will core telehealth growth reaccelerate? | Tests durability outside the GLP-1 boom |
| How much churn occurs during transitions? | Impacts subscriber economics |
| Can acquisitions sustain growth? | Important for valuation support |
| Does competition permanently raise CACs? | Pressures long-term margins |
The Bigger Picture
HIMS is no longer just a telehealth subscription story.
The company now sits at the intersection of:
- pharmaceutical regulation
- GLP-1 pricing pressure
- patent enforcement
- direct-to-consumer healthcare
- telehealth competition
- obesity drug demand
That makes the stock increasingly dependent on regulatory and economic dynamics outside the company’s direct control.
The market spent much of 2024 rewarding HIMS for explosive GLP-1-driven growth.
The next phase of the story may depend on what the business looks like after the shortage-era economics disappear.
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References
- Hims & Hers Health — Investor relations
Official shareholder materials, earnings releases, and SEC filing links.
- U.S. SEC — EDGAR company filings (CIK 1773751)
Periodic reports, current reports, and registration statements on file with the SEC.
- FDA — Drug shortages database
Official U.S. shortage status and related public notices for drug products.
- Novo Nordisk — corporate newsroom
Issuer statements on partnerships, litigation, and branded GLP-1 commercial updates.
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