JP Morgan resumes Hims & Hers coverage at neutral on compounding headwinds

JP Morgan resumed coverage of telehealth company Hims & Hers on September 11 with a neutral rating and a $32 price target, after suspending its rating on the stock in June ^[1]. Analyst Brian Smilek's note points to what the bank calls GLP-1 compounding headwinds, along with the tighter economics of reselling brand-name obesity drugs instead of compounded versions ^[1][2].

The reinstated coverage follows a quarter in which Hims & Hers reported revenue growth of 38 percent to $753 million, but the company posted a net loss of $86 million, reversing a $42.5 million profit from the same period a year earlier ^[2]. Gross margin, the share of each sales dollar the company keeps after paying for the product, fell to 64 percent from 82 percent ^[2]. The company also recorded $33.5 million in restructuring charges, including inventory write-downs tied to compounded product it can no longer sell the way it once did ^[2].

The margin drop traces back to a business shift. For roughly two years, Hims & Hers sold compounded, or custom-mixed, versions of semaglutide during an FDA-declared shortage, keeping a large share of each dollar charged because it did not have to pay a drugmaker's wholesale price ^[2]. That arrangement ended after Novo Nordisk terminated a collaboration with the company in June 2025 over compounded-drug sales, then later dropped its related lawsuit and, in March 2026, agreed to distribute its own branded Wegovy through the Hims & Hers platform ^[2]. Reselling the brand-name drug means the manufacturer, not the telehealth platform, captures most of the profit on each prescription ^[1][2].

JP Morgan's framing, as described in the note, is that the company's profitability now depends on selling a larger volume of branded medication at thinner margins while manufacturers keep more of the value per prescription ^[1][2]. The bank kept its rating at neutral rather than downgrading further, and the stock traded around $28.81 as of the article's reporting, up 4.73 percent that day ^[1].

Why it matters for patients

For people using Hims & Hers to access GLP-1 medications, this shift means the compounded, lower-cost versions that were widely available during the shortage are being phased out in favor of brand-name semaglutide and tirzepatide products, which typically cost more out of pocket ^[2]. Patients who built a routine around a compounded prescription through the platform may see their options and pricing change as the company leans further into distributing branded Wegovy and other manufacturer-supplied drugs ^[2].

The financial pressure on Hims & Hers also matters because a company operating at a loss, even one with fast-growing revenue, faces questions about long-term stability of the services and pricing it offers. The company has set a goal of reaching at least $6.5 billion in revenue and $1.3 billion in adjusted earnings by 2030, a target that requires selling substantially more branded medication despite lower margins per prescription ^[2]. Whether that plan translates into stable or rising prices for patients is not yet known from the sources here.

What happens next

According to the company's own disclosures, gross margin is expected to compress further by a few more percentage points in coming quarters as the shift toward branded drug distribution continues ^[2]. JP Morgan's neutral rating, issued September 11, signals that the bank sees the stock's valuation as already reflecting significant future execution risk, and it will likely watch upcoming quarterly gross margin figures as the key indicator of whether the branded-drug strategy is working ^[1][2]. No specific dated milestones beyond the 2030 revenue target were provided in the sources.