Hims & Hers Stock Falls After Eli Lilly Rules Out Telehealth Tie-Up: Citi Calls It Aggressive Stance, Retail Turns Bearish

Hims & Hers Health Inc. shares slid over 2.8% on Tuesday and continued declining after-hours trading after Eli Lilly clarified that it would not partner with telehealth firms offering compounded GLP-1 drugs.

During an investor conference earlier in the day, Eli Lilly CFO Lucas Montarce said the company requires its telehealth partners to stop selling compounded versions of tirzepatide and semaglutide - the key ingredients in its flagship weight-loss drugs, Zepbound and Mounjaro. 

While Lilly has recently entered agreements with companies like Ro and LifeMD, the stance raises questions, especially since LifeMD still appears to offer compounded GLP-1s.

Analysts at Citi noted the apparent contradiction and said it's "unclear how aggressively Lilly is policing this restriction," but they emphasized that the pharmaceutical giant's messaging has become more aggressive. 

A Lilly spokesperson told MT Newswires that companies continuing to sell compounded GLP-1s, even under terms like "personalized" or "tailored," are breaking the law and endangering patient safety. "We will continue to work with regulators and take other legal actions to stop them," the company said.

Citi analysts believe a partnership with Lilly is unlikely unless Hims drops its compounded GLP-1 offerings - something that currently makes up the majority of its expected weight-loss revenue for 2025. 

If Hims were to align with Lilly, Citi warned, it would signal the company has "thrown in the towel" on compounded medications and is betting that the volume boost from a branded partnership would outweigh the lost margin from compounded sales. 

Citi reiterated a 'Sell' rating and maintained a $30 price target on HIMS shares.

Sentiment on Stocktwits fell into 'bearish' territory by Tuesday evening, a sharp turn from 'neutral' just 24 hours prior. Message volume jumped 50%, indicating heightened retail trader activity and concern.

One user wrote, "Taking some $HIMS puts, looks like it wants that $50.00 test and below - then it can really get ugly. I like the stock and company, but it may have gotten ahead of itself." 

Another said, "Shorted at 57.00, covered too soon at 55.19. Indicators show [a] high probability of another 54.00 dip. I'll go long if it drops to 52.00."

Insider selling has added to investor caution. An SEC filing on Monday showed that Chief Commercial Officer Michael Chi sold 5,100 shares for $285,600 on June 5, intensifying concerns about valuation.

Short interest in HIMS, which hit a record 37.6% of float in early May, has crept back up, according to Ortex data cited by The Fly. After peaking in mid-May, shorts briefly backed off as the stock more than doubled from mid-April, but have now returned. Short interest rose to 33.6% this week, up from 30.7%, with days-to-cover also ticking up.

Meanwhile, Hims & Hers recently announced its acquisition of Zava, a European telehealth platform and online pharmacy with over 1.3 million active customers. The move is seen as a way to grow its direct-to-consumer presence in the U.K., France, Ireland, and Germany. 

While the company expects the deal to be accretive by 2026, analysts warn that expanding overseas as the U.S. market slows could be risky and may signal rising competition and saturation domestically.

Despite the recent pullback, HIMS stock remains up more than 124% year-to-date.

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