Bw Reads: Hims and its wonder drug

Welcome to Bw Reads, our weekend newsletter featuring one great magazine story from Bloomberg Businessweek. Big Pharma hates the telehealth startup Hims & Hers Health. Meme-stock day traders love it. Today, Madison Muller and Devin Leonard write about why its CEO, Andrew Dudum, won't stop selling GLP-1s, no matter how risky it may be for the company. You can find the whole story online here. You can also listen to it here.

If you like what you see, tell your friends! Sign up here.

George's Donuts & Merriment is the kind of spot locals line up outside on the weekend, where you can order a flight of "fried-to-order" sugar-dusted doughnut holes served with Valrhona chocolate fudge sauce. On this sunny morning in March, the French bistro-style cafe in San Francisco's West Portal neighborhood is bustling with stroller-pushing moms eyeing the glass case filled with treats including strawberry Champagne brioche and buttermilk old-fashioned cake doughnuts. This hedonist destination also happens to be the co-creation of Andrew Dudum, chief executive officer of the telehealth company Hims & Hers Health Inc., which for more than a year has been selling GLP-1s, America's most coveted weight-loss drugs.

Dudum—a fit, meticulously groomed 37-year-old—is sitting at the white marble counter wearing a corduroy baseball cap, a quilted jacket and off-white Converse sneakers, digging into a cottage cheese parfait while playing with ChatGPT on his phone. He's been asking the app questions such as "Can I leave chicken out for three hours?" and "Viking stock price analysis"—Viking Therapeutics Inc. is a San Diego-based company developing its own weight-loss shots. Dudum, himself a GLP-1 microdoser (according to Silicon Valley longevity devotees, the drugs can potentially increase your lifespan), has also loaded his labs into ChatGPT, asking it for health advice so he can become "super optimized." He and his wife, Lea, opened George's in January. Turns out it's a lot harder to make money from doughnuts than from weight-loss drugs. "Thank God we have other jobs," he says.

It's the other job that in recent months has been the topic of fervid conversation, disdain and intrigue among any number of groups—pharmaceutical companies, short sellers, meme-stock investors, MAHA ("Make America Healthy Again") leaders and, of course, those trying to find an affordable way to shed a few pounds. Dudum launched Hims in 2017 as an Instagram-inspired telehealth startup that would fill a void in the fragmented US health-care system, enabling customers to buy drugs on a subscription basis almost as easily as they could purchase razor blades from Dollar Shave Club. Today, Hims is a public company that last year had 2.2 million subscribers, $1.5 billion in annual revenue and, in mid-July, a market value of almost $11 billion.

Hims started by offering generic Viagra and Rogaine, two of the most popular drugs in recent history. In pursuit of millennial guys too chagrined to seek in-person counsel from a physician about their hairline or bedroom performance, Hims bedecked New York subway cars and the walls above urinals in San Francisco with intentionally cringey, tough-to-turn-away-from ads, such as those featuring a cactus rising from its planter. Dudum corralled celebrities to sell the company's pills and creams and provided other products people might prefer to have home-delivered in a plain brown wrapper—a climax-delaying spray, for example, or its OMG Ring couples vibrator with 25 different pulsating modes. "For the 26-year-old male who may have self-doubt issues because of some condition, whether it's stress-induced or hereditary, Hims' ability to help solve that has been very successful," says Michael Cherny, an analyst at health-care investment bank Leerink Partners.

Dudum in San Francisco. Photographer: Christie Hemm Klok for Bloomberg Businessweek

In true Silicon Valley fashion, Hims pivoted whenever possible to the next hot product, providing Covid-19 tests during the pandemic and, later, online therapy and generic Prozac. Then last year the company entered the blistering GLP-1 weight-loss-drug market. Demand for Novo Nordisk A/S's Wegovy and Eli Lilly & Co.'s Zepbound so outstripped supply that the US Food and Drug Administration temporarily allowed what are known as compounding pharmacies to brew their own versions using virtually the same ingredients.

Historically all drugs were effectively compounded, meaning pharmacists mixed them up from raw ingredients themselves. But with the advent of the modern pharmaceutical industry, the process moved into highly regulated facilities. Still, the FDA didn't worry if small pharmacies customized drugs for individual patients, such as children who could more easily swallow a syrup than a pill. But by the early 2000s, much larger compounding operations had sprung up. The FDA allows these facilities to make copies of commercially available drugs in the case of shortages. With GLP-1s, compounding pharmacies found themselves with a rare and lucrative opportunity. They could churn out these drugs for telehealth companies that sold them to patients at steep discounts. The market was flooded with copycat medicines even though they'd never gone through the FDA's approval process.

On the day in May 2024 that Dudum announced Hims would sell its own compounded version of Wegovy for $199 a month—as opposed to $1,350 for the brand-name drug—its stock shot up almost 40%. Unlike most of its telehealth rivals, Hims already owned two compounding pharmacies; next it spent $31 million to purchase a third one, which would allow it to manufacture its own injectable products such as GLP-1s. Then in February, Hims acquired another manufacturing facility for an undisclosed amount so it could produce some of the key ingredients in its weight-loss shots, giving it the ability to make them from start to finish. As far as Dudum was concerned, compounded GLP-1s were here to stay, and Hims was all-in. The company doesn't disclose its GLP-1 sales, but Morgan Stanley says that in the fourth quarter of 2024, they accounted for 30% of its total $481 million in revenue. (The investment bank estimates Hims was responsible for as much as 20% of the prescriptions for compounded GLP-1s in the US during that period.)

It seemed, however, there was no way Hims' new growth engine was going to last. Novo was spending billions of dollars to boost its manufacturing capacity. How long would it be before it made enough Ozempic and Wegovy to end the shortage? Not long, it turned out. Hims shares had soared to an all-time high of nearly $69 this past February. Then, the same month, the FDA declared the shortage over—Novo could make enough of its medicine to meet demand—giving pharmacies that were compounding it 60 to 90 days to wind down their GLP-1 operations. Hims shares tumbled, even as Dudum assured investors the post-shortage situation wasn't a disaster. Part of Hims' pitch is what he calls "personalization," meaning it takes drugs already on the market such as Viagra, turns them into chewable tablets, adds wintergreen flavoring, tailors dosages, and, voilà, the result is its cheekily named Hard Mints. Dudum argued that, as long as the company kept customizing its GLP-1s, everything would be fine.

But he wasn't leaving anything to chance. He's courted President Donald Trump's administration, trying to ingratiate himself with Health and Human Services Secretary Robert F. Kennedy Jr., the chief standard-bearer of the vaccine-skeptical, food-dye-loathing MAHA movement. RFK Jr. has questioned the need to prescribe GLP-1 medications for weight loss. But perhaps Dudum's attempts to position Hims as an anti-pharma agitator might help persuade the FDA not to come down on the company if it continued selling compounded drugs after the shortage was over. "RFK Jr. has come in as a force of change," says Alex Beinfield, founder of Blue Duck Capital Partners and a bullish Hims investor. "What other force of change is there within the industry at this point in time? I would argue that it's Hims."

Meanwhile, Dudum also went ahead and wooed some of the very pharmaceutical companies he's demonized. In April he announced a partnership with Novo to sell Wegovy at a discount, saying it validated his long-held assertion that Hims wasn't just doing to drugstores what Warby Parker Inc. had done to your local optometrist; it was building a futuristic portal, one he promised would be "the new front door" to health care. By late June, however, what had seemed from the start an unlikely union imploded spectacularly, with Novo accusing Hims of the "selling of illegitimate, knockoff versions of Wegovy that put patient safety at risk." Dudum fired back on X that the Danish company was "misleading the public." All of it raised the question of whether Hims is, in fact, the future of anything.

Keep reading: How Hims Became the King of Knockoff Weight-Loss Drugs