Analysts said the deal with Novo was likely giving Hims “‘credibility’ or increased consumer traffic,” adding that the “litigation risk is back on the table” now that the Danish pharma has stepped away.
Novo Nordisk’s termination of a weeks-old partnership with telehealth player Hims & Hers Health has shaken up the obesity space, reigniting a row over compounded GLP-1 drugs and the potential for a legal battle.
The companies teamed up in late April. Through the alliance, Hims began offering telehealth packages featuring Novo’s Wegovy on its platform starting at $599 a month. The telehealth provider continued to offer compounded semaglutide after the Novo deal, relying on the personalization exemption once the end of the drug shortage prohibited mass compounding. Hims has pitched its ongoing provision of compounded semaglutide as a way to allow clinicians to personalize titration schedules and steady-stage doses for patients who are unable to tolerate Wegovy because of side effects.
Novo has railed against compounding, which executives blamed for the decision to cut full-year guidance in May. But the pact was pitched as a way to reach more patients. Aaron DeGagne, senior healthcare analyst at PitchBook, said the two companies “always seemed like strange bedfellows” because of their divergent positions on compounding.
Those differences soon scuttled the alliance. Eight weeks after striking the deal, Novo terminated the partnership, accusing Hims of “deceptive promotion and selling of illegitimate, knockoff versions of Wegovy that put patient safety at risk.” According to Novo, Hims “failed to adhere to the law which prohibits mass sales of compounded drugs under the false guise of ‘personalization’.”
Hims CEO Andrew Dudum hit back quickly, taking to X to say his company was “disappointed to see Novo Nordisk management misleading the public.” According to Dudum, in the weeks leading up to the termination of the deal Novo’s “commercial team increasingly pressured us to control clinical standards and steer patients to Wegovy regardless of whether it was clinically best for patients.”
Fallout from the Termination
Branded weight-loss drugs such as Wegovy are a small part of Hims’ business, which generated sales of $1.5 billion in 2024. Truist Securities analysts said in a note to investors that personalized compounding accounted for around two-thirds of the $389 million in weight-loss sales they expected Hims to generate in the second half of 2025.
Yet, Hims’ stock fell 35% on the day Novo walked away, partly wiping out gains made after disclosing the deal in the first place. The termination could hurt Hims beyond the direct loss of Wegovy sales. Truist analysts said Hims “was likely benefiting from the ‘credibility’ or increased consumer traffic onto their platforms as a result of advertising of branded Wegovy.” The termination could reduce traffic and drug compounding sales.
The split from Novo may also open Hims up to lawsuits. Truist analysts named reduced litigation risks as a benefit of the Novo alliance when Hims unveiled the deal in April. The analysts said the “litigation risk is back on the table” after Novo terminated the partnership.
“While Hims would argue that its compounding business is not violating any IP..., Novo could make a legal argument around other practices (corporate practice of medicine, deceptive advertising, etc.),” the analysts said. “A litigation, if there is one, could drag on for 18-24 months and could remain an overhang on Hims shares.”
Speaking on an earnings call in May, Dudum said the FDA’s personalization exemption rules are “extremely straightforward and clear.”
Steven Grossman, a policy and regulatory consultant, discussed the use of the personalization exemption to support “special needs” compounding in a blog post published after Novo terminated the Hims deal. Grossman called for the FDA to urgently address the scope of the exemption to stop compounding from spreading to other drug classes.
“If trivial adjustments to a commercially-available product qualifies as ‘special needs,’ then the shift from regulated manufacturers to unregulated compounders will expand to many additional drug products beyond GLP-1’s,” Grossman said. “Compounding would then be far beyond what the law was intended to permit, and far from the consumer protections we now enjoy.”
Novo’s Search for Growth Drivers
Novo continues to work with the telehealth companies LifeMD and Ro but is cut off from Hims’ platform. The separation limits Novo’s ability to serve a set of patients that David Moore, executive vice president, U.S. operations at the Danish drugmaker, has identified as becoming more and more important.
“Increasingly, people living with obesity are seeking healthcare through telehealth companies, and we need to be where patients are and to have an offering for the real Wegovy,” Moore said on an earnings call in May.
Novo has severed its link to Hims at a time when it is trying to accelerate growth of semaglutide. Obesity sales grew 67% in the first quarter but the drugmaker cut guidance to reflect “lower-than-planned penetration of branded GLP-1 treatments in the U.S., impacted by compounded GLP-1s.” Competition with Eli Lilly’s tirzepatide, which beat semaglutide in a head-to-head trial, is another factor.
