Hims & Hers Health (NASDAQ: HIMS) experienced a devastating 35% stock crash on June 23, 2025, after Novo Nordisk abruptly terminated their brief partnership. The dramatic sell-off reflects not just the immediate loss of a key business relationship, but fundamental questions about the company’s long-term viability in the weight-loss drug market.
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The Partnership That Wasn’t
The collaboration between HIMS and Novo Nordisk, which began in April 2025, was supposed to be a game-changer for the telehealth company. The partnership promised direct access to Wegovy, Novo Nordisk’s blockbuster weight-loss drug, through HIMS’s platform. This arrangement had fueled much of HIMS’s remarkable 150% stock surge earlier this year, as investors bet on a clear pathway to sustained revenue growth.
However, the partnership lasted barely two months. Novo Nordisk cited concerns over what it called “illegal mass compounding and deceptive marketing” by HIMS, specifically pointing to the company’s continued sales of personalized, compounded versions of semaglutide (Wegovy’s active ingredient) rather than focusing solely on the branded medication.
The Core Conflict
The dispute highlights a fundamental tension in the weight-loss drug market. Following the FDA’s declaration that the semaglutide shortage had ended, compounding pharmacies technically lost their legal justification to produce copycat versions of the drug. Yet HIMS continued marketing personalized versions of the treatment, which Novo Nordisk viewed as undermining their branded product and potentially violating regulatory requirements.
This strategic misstep by HIMS reveals a deeper problem: the company appeared to prioritize its existing compounded drug business over nurturing the partnership that investors had priced as its future growth engine. The decision to continue selling personalized versions while simultaneously partnering with Novo Nordisk created an untenable conflict of interest.
Valuation Reality Check
The stock crash, while severe, may still not fully reflect HIMS’s diminished prospects. Even after the 35% decline, HIMS trades at approximately seven times trailing revenues— more than double its five-year historical average of three times revenues. This elevated multiple made sense when investors expected the Novo Nordisk partnership to drive explosive growth, but that rationale has now evaporated.
If HIMS were to revert to its historical valuation multiple of three times revenues, the stock would fall to around $25 — representing another 40% decline from current levels. This suggests the selling may not be finished, particularly as investors reassess the company’s growth trajectory without its key partnership.
Limited Pathway Forward
HIMS can theoretically continue selling personalized obesity treatments, but this approach faces multiple headwinds. The regulatory environment remains uncertain, with the FDA potentially intervening if it determines that companies are abusing compounding loopholes rather than providing genuinely personalized medicine. The loss of Wegovy’s direct sales potential also eliminates what could have been a massive revenue stream from the company’s existing member base.
The question now becomes whether HIMS’s remaining business model can generate sufficient growth to justify any premium valuation. The company’s personalized approach may serve a niche market, but it’s unlikely to match the scale that direct Wegovy sales could have provided.
Investment Verdict
The HIMS situation represents a classic case where investors should resist the urge to “buy the dip.” While the stock’s 35% decline appears dramatic, the fundamental investment thesis has now been altered. The company has lost its clearest path to significant revenue growth and faces an elevated risk profile regarding regulatory compliance.
For now, the prudent approach is to wait and observe how the situation develops. HIMS may find alternative pathways to growth, but without the Novo Nordisk partnership, those routes are far less certain and likely less lucrative. The market’s brutal reaction to the partnership termination sends a clear message: when a company’s primary growth catalyst disappears overnight, even a 35% decline may not be enough to restore attractive risk-adjusted returns.
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