Hims & Hers Stock Soars in Premarket Ahead of Inclusion in S&P SmallCap 600

Shares of Hims & Hers Health experienced a significant increase of over 6% in premarket trading on Monday, following the announcement that the telehealth company is set to join the S&P SmallCap 600 index. This change will see it replace Vector Group, one of the largest cigarette manufacturers in the United States.

The transition, as stated by S&P Dow Jones Indices, comes after Japan Tobacco Group revealed in August that it had reached an agreement to acquire Vector Group for approximately $2.4 billion. The inclusion of Hims & Hers in the index is expected to take effect before trading opens on October 9.

Last week, shares of Hims & Hers had declined after federal regulators announced that Eli Lilly’s popular weight-loss and diabetes medications were no longer in short supply. Major pharmaceutical companies like Eli Lilly and Novo Nordisk have faced challenges in meeting the high demand for these drugs, which can assist patients in losing up to 20% of their body weight on average.

Due to prior shortages, regulators in the US permitted companies to produce compounded versions of brand-name medications. Hims & Hers is one such company, offering a semaglutide injection—the active ingredient in Novo Nordisk’s Wegovy—at a price of $199 per month under a 12-month plan. Recently, the company announced plans to sell compounded versions of Wegovy for $99 per month to certain professionals.

However, the FDA has confirmed that tirzepatide, marketed by Eli Lilly as Zepbound for weight loss and Mounjaro for diabetes, is no longer classified as being in short supply, concluding a shortage that had been designated since 2022.

Analysts at Citi commented that Hims & Hers will remain largely unaffected by this FDA decision, as they produce compounded semaglutide, which is still on the FDA’s shortage list. Nevertheless, they noted that the announcement limits Hims & Hers’s potential market and suggests a quicker resolution to existing shortages than previously anticipated.