Hims & Hers Health will launch some peptide treatments in November without FDA approval after the agency lifted restrictions, and will ultimately move into compounded versions of other popular wellness treatments, BPC-157 and TB-500, that are also not approved by the agency.
The treatments that will be launched in November include NAD+, sermorelin, and glutathione, which are all part of the telehealth company. The company, meanwhile, would also be producing BPC-157 and TB-500 in the United States, said CEO Andrew Dudum.
When used together, the two peptides are used as a combination that is widely used in fitness and recovery programs, commonly referred to as the “Wolverine stack.”
Restrictions have been relaxed by the US government on the compounding of certain peptides that have not received FDA approval, but this policy is based on enforcement discretion, not FDA approval.
For the past year, peptides, short chains of amino acids, have come into the limelight, with influencers across the wellness industry touting them from anti-aging to sexual health.
US Health Secretary Robert F. Kennedy Jr. has been a big fan of peptides and has urged wider availability of the drugs, saying that the ban was forcing Americans to buy potentially unsafe peptides from abroad.
The new policy could leave patients vulnerable to contamination, impurities, and unknown side effects of peptide substances, critics have said, and that peptide substances should be subject to the standard FDA drug approval procedure before manufacturing and prescription.
The revenue from the treatments is projected to be insignificant this year, according to CFO Yemi Okupe.
BRANDED SHIFT HURTS MARGINS
Hims also lowered its full-year core profit forecast on Monday, owing to increased expenses associated with its shift to a branded weight loss drug business and its international expansion that were squeezing margins. The shares of Hims & Hers fell over 3% in volatile after-hours trading.
The company added nearly 2.8 million subscribers, up 13 percent from a year ago, and revenue per average subscriber rose 30 percent to $105 per month. The rise in revenue per subscriber was driven by menopause therapies and by test kits for assessing menopause, said CFO Okupe in an interview to Reuters.
Gross margin dropped precipitously to 57% from 74% last year, as Hims focused on more expensive branded weight-loss medicines and went global. The “margin compression” was “predictable,” said Paul Cerro, chief investment officer at Cedar Grove Capital Management, which is the owner of Hims stock. This is just part of their efforts to increase condition categories and gain more subscribers.
Recently, Hims announced an agreement to supply Eli Lilly’s weight loss medications, bringing its list of partners to include Novo Nordisk. Okupe said the Lilly partnership should help to improve customer retention.
The more diverse product mix of branded weight-loss products is aiding in growth of revenue per subscriber, but in the short term, it is taking a drag on gross margins, said Keonhee Kim, an analyst at Morningstar.
INTERNATIONAL OFFSETS US SLOWDOWN
Revenue from overseas sources also increased significantly, growing more than fourfold to $233.3 million. US revenue rose 21% to $657.1 million. Hims reduced its full-year revenue guidance from $3.1 billion to $3.3 billion to $3.13 billion to $3.15 billion. The revenue drop may have been due to slower sales of Hims’ U.S. business, Kim said, which more than offset its gains in international sales.
The LSEG-compiled data shows third-quarter revenue increased 49% to $890.4 million, which was slightly less than the analyst average forecast of $892.9 million. The company recorded a net loss of $33 million in the quarter, compared with a net income of $15.8 million a year ago.
Hims & Hers Enters the Growing Peptide Market
Hims & Hers is exploring new opportunities in the healthcare market following changes in the regulatory environment surrounding certain peptide products. The move could expand the range of treatments and wellness products available through digital healthcare platforms.
As interest in peptides continues to grow, Hims & Hers could benefit from increasing consumer demand for convenient access to personalized healthcare services. However, the sale of products that are not approved in the same way as traditional medicines may also create important questions about product quality, patient safety, and regulatory oversight.
What the Regulatory Changes Could Mean
The changing US regulatory landscape may create new opportunities for companies operating in digital health and telemedicine. Hims & Hers has built its business around connecting consumers with healthcare services online, and the peptide market could represent another area for expansion.
Regulatory developments can significantly affect how healthcare companies develop, market, and distribute new products. Hims & Hers will need to navigate these changes carefully while maintaining transparency and appropriate clinical standards.
