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Investing.com -- Shares of Hims Hers Health Inc (NYSE:HIMS) jumped 8.2% Wednesday after a key legal development eased market concerns about potential litigation from major pharmaceutical companies. A federal judge’s dismissal of Eli Lilly’s (NYSE:LLY) lawsuit against Willow Health, a telehealth provider similar to Hims, was seen as a meaningful rebuke of efforts to stifle compounded versions of branded weight-loss drugs.
The ruling arrives at a pivotal time for Hims, which has faced intense scrutiny over its distribution of compounded GLP-1 medications like semaglutide and tirzepatide. Although the FDA officially declared shortages of both drugs resolved earlier in 2025, Hims continues to provide compounded versions under federal guidelines that allow tailoring for individual patient needs.
Founded in 2017, Hims has expanded its vertically integrated telehealth model to cover dermatology, sexual wellness, mental health, and most notably, weight loss. The company ended Q2 2025 with 2.4 million subscribers and 73% year-over-year revenue growth, driven largely by demand for cost-effective alternatives to branded GLP-1 treatments.
Prices for Hims’ compounded semaglutide begin at $199 per month, far below the list price for Ozempic or Wegovy, which can exceed $1,300. While these discounts have attracted consumers, they’ve also drawn the ire of Novo Nordisk (NYSE:NVO) and Eli Lilly, who allege that such practices infringe on trademarks and mislead the public about the safety and authenticity of treatments.
Since 2023, Novo and Lilly have filed dozens of lawsuits against telehealth companies, pharmacies, and clinics nationwide, arguing that compounders are exploiting regulatory language under the guise of personalization. Though Hims has not been sued, the termination of a short-lived collaboration with Novo led its stock to plunge 35% earlier this year and triggered investor class-action complaints.
On September 2, U.S. District Judge Andre Birotte Jr. dismissed Lilly’s case against Willow Health. The court concluded that prescriptions involve doctor oversight and no evidence showed widespread harm, and ruled that compounded GLP-1s were deemed safe if tailored to patient needs.
The ruling directly challenges key elements of big pharma’s legal narrative, particularly claims that compounded medications inherently violate patient safety or commercial rights. It also supports the legitimacy of telehealth models that involve physician consultations and patient-specific formulations.
Hims stock rose sharply following the news, signaling renewed investor confidence in the company’s legal footing. While the firm still faces regulatory inquiries and high short interest, Wednesday’s gains reassured traders amid the company’s ongoing battle to maintain access to one of its most critical growth drivers.