Hims’ Weight Loss Expansion: Real Growth or Just Hype?

Key Points

• Hims and Hers Health recently started offering two new weight-loss drugs on its platform.
• One is a branded version of Eli Lilly's Zepbound; the other is an older generic drug. Shares rose solidly after this announcement.
• Can these drugs be true growth drivers for the firm? Which one could add more value? The answer may be surprising.

One of the more hotly debated stocks in the market, Hims & Hers Health NYSE: HIMS, recently made an interesting announcement. The healthcare company said that it will now offer branded Zepbound, Eli Lilly’s NYSE: LLY blockbuster weight loss drug. Zepbound is the most effective weight loss drug that has been approved by the Food and Drug Administration (FDA). 

Studies have found that patients lose around 21% of their weight on average at the highest dose. This is significantly more than the 15% seen by Novo Nordisk's A/S NYSE: NVO Wegovy. Hims will also offer liraglutide, another weight loss treatment. Shares of Hims rose 5% after this announcement, indicating that markets saw it as a positive development.

However, can this announcement move the needle and generate growth for Hims & Hers? Below are the details of these announcements and the events that led up to them.

Hims Looks to Bolster Weight Loss Offering Post Wegovy Shortage

Context is important to understand this announcement. Hims saw massive revenue growth in 2024 as it sold compounded versions of Novo Nordisk’s semaglutide. This is the clinical name for Novo’s Wegovy and Ozempic. The FDA allowed this because there was a shortage of semaglutide. However, the FDA announced that the semaglutide shortage was over on Feb. 21.

In response to this news, Hims shares plummeted by nearly 26%. Since then, the company has been working to figure out how to continue growing its successful weight loss drug business. These moves to offer Zepbound and liraglutide expand the company’s weight loss offerings. However, the idea that they will result in big-time growth looks questionable for several reasons.

Lilly Bluntly Clears Up Relationship With Hims

In a short but sweet press release, Eli Lilly greatly diminished the enthusiasm that Zepbound would drive growth for Hims. It stated simply that “Eli Lilly and Company has no affiliation with Hims & Hers." The company notes that any licensed healthcare professional can prescribe Zepbound. This indicates that Hims has no deal with Eli Lilly that provides any unique business benefits.

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Hims is simply acting as a middleman to patients who are getting the product. This contrasts with the firm’s strategy of selling compounded semaglutide. Since Hims produced semaglutide itself during a shortage, its margins and competitive position were far superior.

Another problem with Hims' Zepbound strategy is pricing. The company is selling Zepbound treatment plans for $1,899 per month. This is over $1,500 more per month than the $349 plan Eli Lilly offers through LillyDirect for out-of-pocket payers.

Hims' plan includes other benefits that the LillyDirect service does not. However, this massive difference in price inspires little confidence. It begs the question as to why anyone would purchase Zepbound through Hims rather than from Lilly itself. Overall, this development seems unlikely to have a big impact on Hims due to these concerns.

Liraglutide Could Provide Some Upside For Niche Use Cases

Surprisingly, liraglutide may be the more interesting addition to Hims' weight loss lineup. Because the company is selling a generic version, the cost of procuring the drug would be significantly lower than Zepbound. This is evident as Hims’ liraglutide plan costs just $299 a month, making it massively more accessible to consumers. However, liraglutide’s comparative weight loss efficacy is important to consider.

A 2022 study compared semaglutide and liraglutide head-to-head. It was found that those taking liraglutide lost 6.4% of their body weight on average, compared to 15.8% for those taking semaglutide. The percentage of gastrointestinal adverse events was barely lower for liraglutide. Furthermore, researchers have found that Zepbound results in average weight loss greater than 20%. Customers could pay around $50 more per month through LillyDirect to get a drug that is over three times as effective.

Still, liraglutide could help the firm cater to patients who want to lose a relatively small amount of weight. Concerns that people are losing too much weight using next-generation GLP-1 drugs, creating other health concerns, could add to this possibility.

Overall, these announcements from Hims & Hers Health aren’t groundbreaking. However, the company is doing what it can to maintain interest in its weight loss drug offerings, which could potentially add to the firm’s subscriber count. It will be interesting to see if the company attempts to continue selling compounded GLP-1s under the guise of “personalization” going forward. This could be a bigger growth driver but also introduce legal risks.