Hims & Hers shifts business model after Novo deal

Hims & Hers (HIMS) has taken a beating, with the stock down roughly 70% from its $70 peak and now trading below $21 per share.

But the story’s changing.

After the company’s Novo Nordisk (NVO) deal and the end of the FDA shortage, Hims is shifting to a broader mix of branded, FDA-approved GLP-1s while pulling back from compounded supply.

This is a shift in how the business operates. The question now is whether HIMS can build a profitable, durable model.

In simple terms, Hims & Hers is an online health care platform that helps people get prescriptions and treatments without visiting a doctor’s office.

The company makes money by connecting patients with licensed providers and selling subscription-based treatments across weight loss, dermatology, mental health, and more.

The business’s competitive advantage comes from its brand, digital experience, and growing role as a distribution layer between patients and drugmakers, especially as it expands partnerships with companies like Novo Nordisk.

The long-term opportunity is still meaningful if Hims can scale this model and maintain strong unit economics.

Novo deal resets weight-loss supply model

Hims & Hers’ collaboration with Novo Nordisk on March 9 marked its clearest move away from compounded semaglutide and toward branded, FDA-approved weight-loss drugs.

The shift came after the FDA said the semaglutide shortage was over, removing the key regulatory opening that had supported broad compounded supply.

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The company saw “tremendous growth opportunities in the U.S. with the expanding assortment of branded GLP-1 medications,” CEO Andrew Dudum said, pointing to a model where drugmakers and digital health platforms could work together to scale distribution.

Then, in an update on Thursday, March 26, Hims said it “will no longer actively market compounded GLP-1 offerings on its platform or in its marketing,” and will instead guide most patients toward branded treatments, while keeping compounded options available only in limited, clinically necessary cases.

This update highlights a broader strategy. Hims plans to “provide GLP-1 customers with access to a broad assortment of FDA-approved medications” through partners such as Novo Nordisk.

The move gives Hims a more durable and compliant supply path for a category that fueled its breakout growth, but it likely comes with lower margins and greater dependence on third-party drugmakers.

Breakout results meet slower 2026 growth

For fiscal year 2025, Hims & Hers reported roughly $2.35 billion in revenue, up 59% from a year earlier, along with $318 million in adjusted EBITDA and $128 million in net income, according to its Feb. 23 earnings release.

But that growth came from a very different model than the one under which Hims operates today.

Guidance already reflects some of that transition. Analysts’ midpoint revenue estimate for fiscal 2026 revenue is about $2.73 billion, implying roughly 16.4% year-over-year growth. This would be a sharp slowdown from 2025’s 59% growth.

At the same time, gross margins are projected to decline from about 74% in 2025 to roughly 72% in 2026, reflecting the shift away from higher-margin compounded products toward branded drugs with lower take rates.

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Operating profitability is also expected to show near-term pressure. EBITDA margins are expected to fall from 13.5% in 2025 to 12.0% in 2026, with EBITDA growth slowing to just 2.7% year over year.

Looking further out, analysts expect margins to expand again as the platform scales, with EBITDA margins expected to reach 12.8% in 2027 and 14.3% by 2028.

Margins may take a hit in the short term before moving higher over the long term.

What could push HIMS higher

Wall Street analysts currently have an average price target of just over $24/share for HIMS, implying the stock could have 16.6% upside today.

Additionally, the stock trades at historically cheap multiples. There are many factors that could drive long-term upside for the stock.

More durable weight-loss growth from branded GLP-1 supplyHigher subscriber lifetime value from cross-selling across weight loss, dermatology, and mental healthOperating leverage, as fixed marketing and platform costs scale with a larger user baseImproved consumer trust and conversion rates from FDA-approved treatmentsNew drugmaker partnerships that expand treatment options beyond Novo NordiskContinued strong telehealth demand across core categoriesPotential international expansion that increases the total addressable marketWhat could weigh on HIMSLower gross margins as the mix shifts from compounded to branded GLP-1 drugsSlower revenue growth in 2026 may pressure the stock’s valuationHigh customer acquisition costs that limit profitability if marketing efficiency declinesIncreased regulatory and legal scrutiny around GLP-1 practicesExecution risk in transitioning patients to new supply channelsDependence on third-party suppliers like Novo NordiskIntensifying competition across telehealth and weight-loss platformsPotential damage to brand trust from ongoing controversy or negative headlinesKey takeaway for investors

The key question now is whether HIMS can drive operating leverage from scaling its model.

Investors should watch margin trends, subscriber growth, and execution on branded GLP-1 supply in the coming quarters.

Related: Novo and Lilly shift GLP-1 strategy abroad: US may be next

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