Why Hims & Hers Health Stock Just Popped

Roller-coaster healthcare stock Hims & Hers Health (NYSE: HIMS), whose stock got devastated last week by worries that it would be shut out of the GLP-1 market, got a reprieve from the Food and Drug Administration (FDA) on Monday.

Shares of the pharmaceutical upstart are flying Tuesday morning -- up 7.3% through 10:20 a.m. ET.

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The FDA's good news for Hims & Hers

Last week, the news on Hims & Hers was all about how a Texas court ruling confirmed the FDA can declare an end to the shortage of tirzepatide-based GLP-1 weight-loss drugs from Eli Lilly (NYSE: LLY), just as it had previously called an end to the shortage of Novo Nordisk's (NYSE: NVO) similar semaglutide-based Ozempic. But yesterday, the FDA clarified its own opinion on the matter.

In a note posted on its website, the FDA clarified its "policies for compounders as national GLP-1 supply begins to stabilize." As regards tirzepatide, the FDA declared it "does not intend to take action against compounders" mimicking Lilly's Zepbound weight-loss drug "until March 19, 2025," so long as they are acting under Section 503B of the FD&C Act. (This section is what permits Hims & Hers to produce otherwise patent-protected GLP-1 drugs while the supply of such drugs is in deficit.)

As regards semaglutide, FDA says compounders such as Hims & Hers have until May 22, 2025, "or until the date of the district court's decision on the plaintiffs' forthcoming preliminary injunction motion," to continue selling their product.

What this means for Hims & Hers

In other words, while Hims & Hers' tirzepatide business is going away in a week, the company can continue selling semaglutide clones for another couple of months, probably. In a note out on TheFly.com today, Bank of America analyst Allen Lutz commented that the "lion's share" of analysts predict that $725 million in weight-loss revenue for Hims & Hers this year will come from semaglutide -- not tirzepatide -- sales.

Thus, this FDA decision is an incremental positive for Hims & Hers.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.