Smart money saw the regulatory cliff coming a mile away.
According to new data from Hazeltree, hedge fund bets against telehealth firm Hims & Hers Health (HIMS) hit their highest level in at least a year just before the company clashed with Novo Nordisk and the FDA.
📉 THE SHORT THESIS PLAYED OUT PERFECTLY:
- The Setup: Nearly 65% of available Hims stock was loaned out for short selling in January—the most since October 2025.
- The Catalyst: On Feb 5, Hims launched a $49 compounded version of Wegovy. By Feb 7, they withdrew it under FDA scrutiny. By Feb 9, Novo Nordisk sued for patent infringement.
- The Result: Shares have crashed >50% since the start of 2026, wiping out a third of the value in less than a week.
⚖️ THE “ILLEGAL COPYCAT” RISK: The short sellers correctly identified that the “compounding loophole” was closing.
- The Quote: Ryan MacDonald (Needham) notes: “The short position… sprung from the dissolution of the partnership that Hims had with Novo Nordisk.”
- The Reality: Without access to branded GLP-1 supply, and with the FDA cracking down on “illegal copycat drugs,” Hims is now looking at the lucrative weight-loss market from the outside.
💡 ANALYST TAKEAWAY: This is a textbook example of “Regulatory Arbitrage” going wrong. Hims tried to exploit the drug shortage to sell compounded semaglutide, but hedge funds recognized that once the branded supply stabilized (or the FDA stepped in), the business model would evaporate. The massive short interest confirms that institutional investors viewed this as an inevitable regulatory enforcement action, not a sustainable pivot.
👇 Healthcare Investors: Is the compounded GLP-1 trade officially dead, or will telehealth firms find another loophole?