Hims & Hers slides after Cigna unit launches obesity drug plan

Shares of Hims & Hers (HIMS) are under pressure on Thursday after Cigna (CI) said its drug benefit unit will cap out-of-pocket costs for weight-loss drugs at $200 a month for patients, which presents a cheaper cash-pay alternative to the telehealth platform’s offerings. Commenting on the news, Citi said it believes this will be a “slight headwind” to Hims & Hers’ newly announced NovoCare partnership. Meanwhile, Truist told investors that it believes it is very likely that other PBMs will follow suit in some way on weight loss medication coverage.

WEIGHT LOSE DRUG COST: Evernorth, the health services division of Cigna, announced a pharmacy benefit offering that make weight loss medications Wegovy and Zepbound more available to patients. Through direct negotiations with the manufacturers, Evernorth has ensured that patients’ monthly cost will not exceed $200, the company said in a statement. Evernorth’s monthly copay for GLP-1 weight loss medicines will be limited to no more than $200, which will have the added benefit of counting towards the patient’s annual deductible, it added. 

ATTRACTIVE COMPARED TO HIMS: Commenting on the news, Truist noted that Evernorth also said in its release that the prior authorization processes accompanying the new offering will be simplified and automated for faster access. “Considering the big three PBMs have historically moved in lock step with each other, we believe it is very likely that other PBMs will follow suit in some way on weight loss medication coverage,” the firm tells investors. Though it remains to be seen how onerous it will be for patients to get access to these drugs, the price point of $200/month is “highly attractive compared to other price points in the market,” including Hims & Hers’ compounded Semaglutide, Wegovy and Liraglutide subscription programs, adds the Truist. The firm keeps a Hold rating and $45 price target on Hims shares. 

SLIGHT HEADWIND: Citi keeps a Sell rating on Hims & Hers with a $30 price target after Cigna’s Evernorth announced it is launching a new benefit option that caps patient out-of-pocket costs for Wegovy and Zepbound at $200 per month. This is lower than the cash pay price for Wegovy offered through NovoCare and Tirzepatide Vials offered through LillyDirect, the firm tells investors in a research note. Citi says that Evernorth’s offering also has the benefit of counting out-of-pocket costs towards the patients’ annual deductible and simplifying prior authorization. The firm believes this will be a “slight headwind” to Hims & Hers’ newly announced NovoCare partnership where patients get access to Wegovy and ongoing clinician and nutritional support for as little as $599 per month. The direct-to-consumer platforms have benefited from employer reluctance to cover GLP-1s for weight loss due to prohibitive costs, but Evernorth’s offering may accelerate employer coverage adoption, contends Citi.

PRICE ACTION: In Thursday morning trading, shares of Hims & Hers have dropped over 6% to $10.63.