Hims & Hers CEO defends compounding pharmacy acquisition
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Hims & Hers plans to acquire a compounding pharmacy as the telehealth company doubles down on weight-loss drugs and expands into other categories.
Why it matters: The growing GLP-1 space could increase sales for Hims & Hers, but the company has come under scrutiny over the options that it offers.
Driving the news: Hims & Hers, which said in May that it would begin selling compounded versions of GLP-1 injections, disclosed on Monday a plan to buy a U.S.-based compounding facility registered with the FDA.
- It didn't identify the previous owner or the location of the site.
Between the lines: The acquisition "will enable HIMS to scale quickly and drive efficiency by verticalizing operations that require sterile, compounded medications," TD Cowen analyst Jonna Kim wrote today in a research note.
- We continue to like HIMS' capabilities to provide personalized healthcare offerings at affordable price points, but monitor execution around GLP-1s and subscriber growth."
Friction point: Compounded drugs have come under fire recently for quality standards. And the editorial division of the hedge fund Hunterbrook reported in June that Hims & Hers was relying on a supplier "with previously unreported ties to fraud."
- The supplier said it was following safety protocols.
Hims & Hers acknowledged Monday in the SEC filing that "certain compounding pharmacies" and "outsourcing facilities have experienced both facility and product quality issues and been the subject of negative media coverage as well as litigation in recent years, including with respect to compounded GLP-1s."
- It did not say whether the supplier it's working with or the one it's acquiring are among those.
The latest: In an interview this afternoon with Axios' Hope King for "Leading Indicator," a show from investing platform Public, Hims & Hers co-founder and CEO Andrew Dudum said that safety is the company's "utmost focus."
- "What I've said in the past is we have no desire to be first to market. We want to be best in market always," he said. "And our brand and our reputation is what matters most."
Context: Hims & Hers shares surged after the company said in May that it would begin selling compounded versions of GLP-1 injections.
- Companies can sell these alternatives when the original treatments appear on the FDA's drug shortages list.
- Hims & Hers revenue jumped 52% in the second quarter compared with a year earlier to $316 million and the company raised its full-year sales forecast.
- Of that, $16 million came from GLP-1s, Dudum said.
What they're saying: "You should expect us to continue to expand as we have in the last few years," he said in today's interview.
- "Categories such as hormonal therapy, menopause, all require this type of sterile medication and treatment. And these are categories we're very excited by."
Disclosure: Hope was a paid moderator for the Hims & Hers conversation.
