Quick Hit on HIMS
Live by the squeeze, die by the squeeze...
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Just last week, with a seemingly rising number of stocks unhinged from reality, I wrote... “The stocks that make me look dumbest are generally the most senseless...”
Top of the list was Hims & Hers HIMS 0.00%↑, the telemedicine company that plunged 35% today.
I’ve been red-flagging Hims since in May 2024. The company has flouted all sorts of rules and regs – seizing whatever loopholes it could grasp – to sell compounded versions of patented GLP-1 drugs... notably Novo Nordisk’s NVO 0.00%↑ semaglutide, better known as Wegovy and Ozempic.
As I wrote in my essay, which I should have headlined “the smug and the senseless”...
If I had to pick one that might possibly get from here to there it would be Hims, but only because the FDA has gone MIA, allowing the company to act in the grayest of gray areas. Then again, as I’ve written repeatedly over the decades: if an investment thesis relies on the rulings of courts, Congress or a regulatory body, good luck! (And that goes for longs and shorts.)
In the meantime, the driver of its earnings – compounding of GLP-1 weight-loss drugs – is dubious, at best. Heck, last quarter the company missed subscriber growth numbers. What’s more, competitors are piling into its non weight-loss products. But as I’ve sarcastically joked with friends, Hims could file for bankruptcy and its stock would go higher. And that’s even though it's really little more than a telehealth company with NO moat... that for the time being has become memefied.
Which they all are until they aren’t...
Friend Turns Foe
Today was Hims’ turn, when Novo Nordisk issued a press release terminating a collaboration the two announced a month ago – a deal that fueled a near-doubling in its stock price.
Since then, insiders have been active sellers, including CEO Andrew Dudum... and the company has used its rising share price to sell more shares. Dudum alone has sold, by my count, roughly $24 million worth of shares since the agreement was first announced.
My, what a difference a month makes. Today, in calling off the deal, Novo cited Hims’ “deceptive promotion and selling of illegitimate, knockoff versions of Wegovy that put patient safety at risk.”
Novo went on to imply that what Hims is doing an “illegal sham” by selling drugs that are “made with foreign illicit active pharmaceutical ingredients.”
The company supported its comments by citing a study from the Brookings Institute that Novo says makes the point that “the FDA has never authorized or approved the manufacturing processes used by any of these foreign suppliers to make semaglutide, nor has FDA ever reviewed or authorized the quality of the ‘semaglutide’ they produce.”