The FTC Is Suing Hims & Hers Health—Here's Why Investors Shouldn't Panic

Key Points

• The FTC sued Hims & Hers Health in late July over alleged deceptive privacy practices and billing methods, yet shares have still rallied 29% since the announcement.
• Hims & Hers is pivoting toward brand-name GLP-1 drug partnerships with Novo Nordisk and benefiting from employers dropping weight-loss drug coverage, which could boost future revenue.
• Wall Street remains cautious with a consensus Hold rating, heavy short interest, slowing institutional buying, and insider selling ahead of the company's Aug. 10 earnings report.

As the rotation out of high-flying tech stocks continues, the healthcare sector has been a major beneficiary. Over the past three months, that corner of the market has been one of the strongest performers among the S&P 500’s 11 sectors with a nearly 12% gain.

Hims & Hers Health NYSE: HIMS, the telehealth platform that provides direct-to-consumer (D2C) personal care products and virtual medical services, has played a role in that rally. Since May 5, shares are up more than 22%.

But in late July, a potential headwind emerged that could potentially threaten HIMS’ run, which has seen the stock gain more than 121% since its year-to-date low on Feb. 27.

The FTC Hones in on Hims & Hers Data Sharing and Deceptive Billing

On July 29, the U.S. Federal Trade Commission (FTC), joined by Utah and California through the Los Angeles County Counsel, announced that it was suing the telehealth company for deceptive and unlawful privacy practices.

The FTC’s complaint, filed in the U.S. District Court for the Northern District of California, alleges that Hims & Hers shared consumers’ sensitive health information with third-party advertising platforms, including Meta Platforms NASDAQ: META and Snap NYSE: SNAP, despite promising patient privacy.

The FTC also alleges that Hims & Hers has made it difficult for consumers to cancel subscriptions, billing refill charges 10 days earlier than expected, and that the company failed to “clearly disclose that it charges consumers for prescriptions almost immediately after they submit an intake form, despite telling consumers that they will be able to consult with a medical provider to find a treatment that is ‘right for them.’”

The lawsuit is the latest instance of the FTC’s recent crackdown on healthcare companies sharing sensitive data with outside companies without consumers’ knowledge or permission. But investors appear to have taken the news in stride. Since the FTC announced the lawsuit, shares of HIMS have rallied 29%.

Catalysts Outweigh Perceived Lawsuit Setbacks

While the outcome of the lawsuit is yet to be seen, Hims & Hers has numerous tailwinds capable of muting any potential fallout from the FTC’s complaint. Chief among those may be the company’s pivot from marketing compounded GLP-1 to brand-name drugs through partnerships with major pharmaceutical manufacturers.

Specifically, the Hims & Hers’ strategic agreement with Novo Nordisk NYSE: NVO resulted in the fulfillment of more than 125,000 Wegovy shipments in Q1. The company noted how that momentum puts it on track to add north of 100,000 new weight-loss subscribers per month moving forward.

Another boon comes in the form of employers preparing to drop GLP-1 weight-loss drug coverage, including Wegovy, Ozempic, Zepbound, Mounjaro, and Foundayo—products that are manufactured by Novo Nordisk NYSE: NVO and Eli Lilly NYSE: LLY and sold by Hims & Hers, which currently generates around one-third of its revenue from its weight-loss business.

The loss of workplace health plan coverage for those medications is likely to spur a migration to D2C cash-pay telehealth providers whose models avoid insurance middlemen and low reimbursement rates, making them an ideal solution for lost coverage. If that materializes in the near term, it should help Hims & Hers improve its top line and operating margins.

Together, those catalysts should help normalize revenue growth, which stalled in Q1 at just 3.77% year over year. However, in the prior four quarters, that figure averaged 65.21%.

What Wall Street Thinks About Hims & Hers Health

The smart money continues to take a cautious approach with HIMS. The stock receives a consensus Hold rating, with only four analysts assigning it a Buy. The average 12-month price target suggests around 2% potential downside.

Meanwhile, HIMS remains one of the market's most heavily shorted stocks. The high-volatility stock, which carries a beta of 2.4, is currently showing short interest of 30.07% of the float, or $2.29 billion worth of shares. Some of that elevated bearishness can be attributed to the FTC lawsuit, while the company’s announcement in May of a $350 million private offering of senior convertible notes has fueled concerns about shareholder dilution.

Institutional buying has slowed dramatically, falling for four consecutive quarters from a one-year high of $722 million in Q2 2025 to just $722,000 in Q2 2026. Over the same period, Hims & Hers saw only one insider buy of about $1.17 million, compared with eight sales totaling nearly $87 million.

After missing analyst expectations on both revenue and earnings in Q1, the company is set to report Q2 earnings on Aug. 10 after the market closes. Investors will want to monitor earnings call comments about guidance and how the company intends to address the looming FTC legal action.

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