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Disclosures |
This is a paid advertisement for EnergyX's Reg A offering. Comparisons to other companies are for informational purposes only. Past performance is not indicative of future results. |
Please consider this disclosure alongside EnergyX's offering materials. EnergyX's Regulation A offering has been qualified by the SEC. Offers and sales may be made only by means of the qualified offering circular. Before investing, carefully review the offering circular, including the risk factors. The offering circular is available at invest.energyx.com |
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FEATURED ARTICLE |
Hims & Hers and Novo Nordisk: Anatomy of a Sell-Off — and What It Means for Value Investors |
Today's market reaction in Hims & Hers Health (NYSE: HIMS) isn't some random volatility spike. It's a structural event tied to product strategy, regulatory risk, patent law, and competitive dynamics in one of the fastest-growing segments of healthcare: weight-loss medications built around GLP-1 compounds.
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Let's unpack: |
What actually happened Why HIMS got hammered How Novo Nordisk (NYSE: NVO) fits in Is HIMS cheap now — opportunity or trap? Novo Nordisk's positioning and prospects Risk scenarios and actionable levels Investor playbook
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The story is long, messy, and full of nuance — but that's exactly where mispricing lives. |
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1) What Just Happened — Quick Market Recap |
Over the past couple of days: |
Hims & Hers stock plunged sharply — in some sessions down 15%–20%+ early Monday — after announcing it would halt sales of a compounded version of a GLP-1 weight-loss drug. The product was intended to be marketed at a heavily discounted price (~$49/month) compared with the recently approved pill versions of semaglutide like Wegovy (~$149/month) and injectables. Novo Nordisk both responded legally by filing a patent infringement lawsuit against HIMS and emphasized the safety and regulatory issues around compounded GLP-1 drugs in general. The U.S. FDA and Department of Health and Human Services have signaled intent to crack down on unauthorized compounded GLP-1 medications, citing safety concerns and potential law violations. Meanwhile, Novo Nordisk's shares actually rose on news of Hims' product withdrawal and the legal escalation.
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The bottom line:
Hims tried an aggressive strategy to undercut branded weight-loss drugs. Regulators and Novo pushed back hard. The market punished HIMS accordingly. |
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2) Why Hims & Hers Was Crushed |
There are three serious fundamental drivers behind the sell-off: |
A. Regulatory Risk Is Real and Immediate |
The FDA isn't just grumbling — it's using its enforcement authority.
Referrals to the Department of Justice and strong statements against unauthorized compounded drugs are not the usual regulatory noise. Regulators are saying: |
"If you're selling non-FDA-approved alternatives nationwide, that's a violation." |
That changes the investor calculus. |
B. Novo's Legal Response Isn't Bluster |
Novo's lawsuit isn't simply about profits — it's about protecting patent rights and the regulatory regime that supports them. Semaglutide and related formulations are under patent protection in the U.S. through the late 2020s. |
If courts uphold that protection, Hims' GLP-1 opportunity could be legally closed — not just economically constrained. |
C. Hims' Business Model Isn't Built Around High-Margin Proprietary Drugs |
Unlike big pharma, Hims is a telehealth/online pharmacy platform, not a drug developer. Its historic growth has come from: |
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Taking on a $70 billion weight-loss market with a product that regulators and original patent-holders dispute feels like strategic overreach, not expansion. |
Analyst commentary ahead of the move suggested investors were already nervous, with some noting that GLP-1 weight-loss would represent only ~30% of Hims' 2025 revenue forecast, not all of it. |
That means HIMS' survival doesn't depend on this product — but |
its valuation does. |
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3) Novo Nordisk: Competition, Patents, and the Big Picture |
Novo isn't just reacting defensively. |
It's operating in a changing competitive environment: |
Novo's semaglutide products (Wegovy/Ozempic) remain among the most successful weight-loss drugs ever, with multi-year growth. Novo has aggressively expanded capacity — including billions in manufacturing investments — to meet demand. The company is also evolving its go-to-market strategy, including direct-to-consumer initiatives and premium pricing that support margin expansion. Novo's competitors, including Eli Lilly with its own GLP-1 pipeline, increase pressure — but they also validate the market.
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From a valuation perspective, a strong legal outcome and regulatory control of the drug supply chain protects Novo's earnings power and pricing leverage — which is likely why its shares moved in the opposite direction of HIMS today. |
Novo was also recently cited in regulatory news for a warning letter about misleading advertising in a TV spot — signaling that even the big incumbents aren't immune to oversight. |
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4) Is Hims & Hers Now Cheap? Opportunity or Trap? |
Here's where we peel back the narrative. |
Valuation Context |
HIMS now trades near yearly lows, and its revenue multiple (around ~1.5× projected 2026 revenue in some analysis) looks low relative to growth tech peers. |
That sounds cheap. But cheap doesn't equal value unless you understand what's priced in. |
Today's action has likely priced in: |
loss of the GLP-1 weight-loss revenue opportunity increased legal and regulatory scrutiny higher compliance costs potential industry-wide restrictions on compounded drugs
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If all of that is already discounted, that suggests HIMS may have value if it stabilizes its platform revenue outside GLP-1 products. |
But there's a real risk asset here: |
If the legal actions go beyond this product — e.g., if regulators tighten compounded drugs more broadly — HIMS could lose access not just to this product but to other low-barrier opportunities. |
That's a value trap setup: |
Low price, but fundamentally weaker future cash flows than implied by valuation. |
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Bullish scenario (not impossible) |
If: |
HIMS pivots successfully to diversified non-patent drug offerings telehealth appointment growth accelerates margins improve on subscription products
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Then the stock could recover over time. |
But that's not a short-cycle trade — that's multi-quarter to multi-year. |
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5) Novo Nordisk: Cheap Now Too? |
This might be surprising, but Novo appeared to recover some lost ground on this news. |
Why? |
Today's legal pushback protects its core market. When a smaller competitor cannot lawfully undercut a patented product, the pricing and market share remain with the incumbent. |
That supports: |
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Novo's revenue last year was ~Danish Kroner 290 billion (~$42 billion), with net income over $14 billion. |
Even after a broader industry slowdown and guidance cuts tied to GLP-1 sales growth in recent months, Novo's fundamentals remain strong, and the stock price reflects that stability. |
Yes, competition from Eli Lilly and others is real — but patent control and regulatory backing still give Novo a moat that HIMS lacks. |
From a Cheap Investor point of view, Novo's protection of its pricing power and share could make current levels a more defensible valuation entry point than the headline risk suggests. |
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6) Key Risks for Both Stocks |
Hims & Hers Risks |
Regulatory crackdowns on compounded drugs: FDA and Justice Department referral is not just advisory — it's enforcement momentum. Legal liability and patent loss: If courts side with Novo, semaglutide access via HIMS could be severely restricted. Execution risk: HIMS must pivot its business model away from GLP-1 momentum — that's operationally hard when revenue expectations were tied to it.
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Novo Nordisk Risks |
Competition pressure from Eli Lilly and other entrants could erode future growth. Regulatory headlines around marketing — even Novo received a warning about an ad being "misleading." Dependency on a few blockbuster drugs: If new products don't hit expectations, multiples could compress.
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7) The Investor Playbook — What to Do Now |
For HIMS: |
Accumulate only if diversified exposure exists: don't buy just because the P/E looks low. Track regulatory developments daily: FDA/DOJ actions will drive headline risk. Watch non-GLP-1 revenue growth: that's the real long-term value signal. Use defined-risk option strategies if exposure is size-sensitive.
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For Novo: |
Watch competitive data from Lilly and others. Follow pricing and patent enforcement news. Track any additional regulatory pressure. Consider Novo as a moat play with pricing power, but expect earnings volatility tied to guidance.
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Final Bearings: Cheap or Cheaper? |
HIMS — cheap in headline multiples, but carries real structural risk; a potential value if it can pivot and diversify, but not without execution and regulatory uncertainty. |
Novo Nordisk — cheap only if you trust patent protection and pricing power over the next 5+ years; the legal defense of its position may keep earnings stronger than feared. |
For a Cheap Investor, the edge is in distinguishing price from value — seeing volatility as an opportunity only when fundamentals support an eventual re-rating. |
Today's pain in HIMS isn't just a headline — it's a reminder that regulation and intellectual property matter as much as growth narratives in high-stakes healthcare markets. |
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investing involves risk, including the potential loss of principal. Always do your own research before making investment decisions. |
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