Hedge Funds Were Right on Hims & Hers Ahead of FDA Crackdown and Novo Nordisk Litigation

Short interest in Hims & Hers surged in January, reaching the highest level seen in at least a year. A sizable portion of the stock was lent out to investors betting on a decline, a move that preceded a wave of regulatory and legal challenges facing the telemedicine company.

During January, the number of outstanding shares sold short against Hims & Hers climbed to their peak in over a year. Much of the float had been borrowed and deployed by traders wagering on lower prices. This activity occurred just ahead of the regulatory and legal hurdles that would soon grab headlines.

The timing proved sharp. Shortly thereafter, the U.S. Food and Drug Administration announced actions targeting illegal imitator medications. In response, Hims & Hers pulled its newly launched semaglutide pill from the market.

Should investors sell immediately? Or is it worth buying Hims & Hers?

Legal action from a major pharma player

Novo Nordisk filed a patent infringement suit against Hims & Hers, alleging that the company marketed unapproved versions of Wegovy and Ozempic. The Danish pharmaceutical giant’s move came as regulators increased scrutiny on the sector.

The case was referred by the Department of Health and Human Services (HHS) to the Department of Justice over potential violations of federal law. The FDA stepped up its stance against unapproved GLP-1 products, citing safety and quality concerns. Hims & Hers countered that the suit represents an attempt by “Big Pharma” to limit consumer choice.

Market impact and upcoming earnings

The combined pressure from ongoing litigation and heightened regulatory risk weighed on the valuation of Hims & Hers. On February 23, the company is scheduled to report its fourth-quarter results and full-year 2025 results. The release is expected to shed light on how these recent developments have affected the business.