Healthcare Under Fire: FDA Action, Lawsuits, and Downgrades Hit Hims, UNH Stock
Healthcare stocks are facing renewed pressure as FDA intervention, legal action against Hims & Hers, and earnings weakness at UnitedHealth..
Quick overview
- Healthcare stocks are under pressure due to FDA intervention, legal actions, and rising medical costs, leading to increased volatility in the sector.
- Hims & Hers has discontinued its compounded Wegovy product following an FDA warning, resulting in a significant drop in its stock price.
- Novo Nordisk has filed a lawsuit against Hims & Hers for patent infringement, further complicating the regulatory landscape for the company.
- UnitedHealth Group is facing challenges with elevated medical costs and weaker-than-expected earnings, contributing to a decline in investor confidence.
Healthcare stocks are facing renewed pressure as FDA intervention, legal action against Hims & Hers, and earnings-related weakness at UnitedHealth compound investor concerns over soaring medical costs and regulatory uncertainty.
Healthcare Sector Weakness Deepens
Health-sector stocks—including Hims & Hers, UnitedHealth Group (UNH), and Novo Nordisk—have come under sustained pressure in recent months as medical costs continue to rise and regulatory risks intensify. What was once viewed as a defensive corner of the market has increasingly become a source of volatility, with investors questioning earnings durability, policy direction, and valuation support.
That pressure intensified again this week following a series of developments tied to GLP-1 weight-loss drugs and insurer cost dynamics.
Hims & Hers Pulls Compounded Wegovy After FDA Warning
Hims & Hers announced it will discontinue its $49 compounded oral version of Wegovy, responding to escalating scrutiny from U.S. regulators. The decision followed a sharp warning from the U.S. Food and Drug Administration, which reacted strongly after Hims launched the pill late last week.
FDA Commissioner Marty Makary stated the agency would “take swift action” against companies selling illegal knockoff medications, specifically targeting mass-marketed compounded GLP-1 products. The warning triggered an immediate selloff in Hims shares, which fell nearly 8% intraday before staging a modest bounce.
Despite the strong language, skepticism remains around enforcement. Bernstein analyst Christian Moore noted he is not “holding [his] breath” for aggressive follow-through, pointing to the FDA’s historical challenges in policing compounded drug markets at scale.
Novo Nordisk Lawsuit Raises Legal Stakes
Regulatory pressure escalated further on Monday when Novo Nordisk filed a lawsuit against Hims & Hers, alleging patent infringement tied to the “unlawful mass marketing” of unapproved semaglutide products. The legal action followed Hims’ brief announcement—and rapid reversal—regarding the availability of compounded oral semaglutide on its platform.
Adding to the uncertainty, the FDA has formally stated its intent to restrict access to GLP-1 active pharmaceutical ingredients used in non-FDA-approved compounded drugs, explicitly naming Hims & Hers. This move threatens a meaningful portion of Hims’ compounded GLP-1 business model and raises questions about the sustainability of growth in that segment.
Analyst Downgrade Amplifies Hims Selloff
The legal and regulatory fallout prompted a sharp reassessment from Wall Street. Canaccord Genuity slashed its price target on Hims & Hers to $30 from $68, while maintaining a Buy rating. The magnitude of the cut underscores the perceived rise in legal and regulatory risk, even as analysts stop short of abandoning the long-term growth thesis.
HIMS Chart Weekly – Slipping Below the 200 SMA
Hims shares are now trading near $17, after a bearish gap lower that pushed the stock below its 200-week simple moving average. From a technical perspective, the breakdown opens the door to further downside toward $12.50 and potentially $10 if selling pressure persists and headline risk remains elevated.
UnitedHealth Struggles Under Cost Pressures
UnitedHealth Group, the largest health insurer in the U.S., has also weighed heavily on sector sentiment. The stock remains under pressure following weaker-than-expected earnings and ongoing concerns about elevated medical costs.
UNH’s recent volatility reflects a broader recalibration rather than a collapse in fundamentals. While adjusted earnings remain resilient and management is focused on restoring margins, the outlook points to consolidation rather than renewed growth in the near term.
A Volatile Reset for a Healthcare Bellwether
UnitedHealth’s turbulence has been striking. After trading near $600 in April 2025, the stock plunged more than 60% to around $235 by August, following management’s rare decision to suspend forward guidance due to unexpectedly high medical costs. That move severely dented investor confidence.
UNH Chart Monthly – Heading to the 200 SMA After Being Rejected by the 100 SMA
Sentiment briefly improved when guidance was reinstated in July, sparking a rally of more than 55% into October. However, the recovery proved fragile. Following the latest earnings update, UNH shares fell roughly 20%, slipping back below $300 and reinforcing how sensitive the stock remains to cost visibility and forward assumptions.
Conclusion: The combination of FDA scrutiny, legal risk, analyst downgrades, and cost inflation has placed healthcare stocks firmly back in the spotlight—for the wrong reasons. For Hims & Hers, regulatory clarity around compounded GLP-1 drugs is now the critical swing factor, while UnitedHealth must convince investors that cost pressures are stabilizing. Until visibility improves on both fronts, volatility across the healthcare sector is likely to remain elevated.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Save