By Christy Santhosh
May 12 (Reuters) – Shares of Hims & Hers Health fell 16% premarket on Tuesday after the telehealth company’s pivot to branded weight-loss drugs drove up costs and led to a surprise loss in the first quarter.
The company missed Wall Street estimates for first-quarter revenue, with the transition from cheaper, compounded versions of GLP-1 drugs to branded ones hitting sales and contributing to higher restructuring costs. Hims & Hers expects to return to a profit in 2027.
Hims & Hers had previously leaned on compounded versions of GLP-1 drugs, which are typically cheaper than branded treatments such as Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound.
The U.S. Food and Drug Administration, however, moved to restrict compounding of copycat versions of GLP-1 drugs. It referred the firm to the Department of Justice over potential violations, sending its shares down more than 10% earlier this year.
The company said late Monday that the strategic pivot toward branded GLP-1 weight-loss drugs pressured its margins and domestic sales.
A shift to shorter shipping schedules also led to a change in revenue recognition timing for some weight-loss products, affecting its U.S. topline, the telehealth firm added.
The company reported a loss of 40 cents per share for the three months ended March 31. Analysts on average expected a profit of 4 cents per share, according to data compiled by LSEG.
The loss was due to write-downs Hims took on ingredients used to compound semaglutide, the active ingredient in Novo’s Wegovy, and one-time legal and merger costs, Chief Financial Officer Yemi Okupe said.
“Transitions take time and create changes, something playing out (in) real-time as HIMS takes on a lower-margin opportunity where it is well-positioned to see incremental growth,” said Leerink Partners analyst Michael Cherny.
Cherny said the brokerage sees Hims & Hers’ profit targets as “more aspirational at this point in time.”
(Reporting by Christy Santhosh in Bengaluru; Editing by Joyjeet Das and Tasim Zahid)
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