Hims & Hers Health Inc. (HIMS) saw its stock plummet 6.05% in after-hours trading on Wednesday, as investors reacted to news that could significantly impact the company's weight-loss drug business. The sharp decline comes amid developments in the broader weight-loss drug market that are likely to reshape competition in the sector.
The U.S. Food and Drug Administration (FDA) is set to end its policy allowing compounded copies of popular weight-loss drugs like Wegovy and Zepbound on May 22. This policy had previously benefited companies like Hims & Hers, which saw soaring sales of these compounded versions while the brand-name drugs were in shortage. The imminent policy change threatens to cut off a significant revenue stream for Hims & Hers and other similar companies.
Adding to the competitive pressure, health insurance giant Cigna announced on Wednesday that it will cap out-of-pocket costs at $200 per month for patients using brand-name Wegovy and Zepbound through an add-on to its pharmacy benefit management plans. This move could make the original drugs more accessible to consumers, potentially further eroding demand for compounded alternatives. As the landscape of the weight-loss drug market rapidly evolves, investors appear to be reassessing the growth prospects of companies like Hims & Hers that have capitalized on the recent shortages and high prices of these popular medications.
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