Investing.com -- Hims Hers Health Inc (NYSE:HIMS), a telehealth firm known for offering consumer-focused digital healthcare, is reducing its headcount by more than 4% as part of a pivot in its business strategy, according to Bloomberg. The decision impacts 68 employees across multiple divisions of the San Francisco-based company, which employs over 1,600 staff.
The layoffs come as Hims moves away from leveraging regulatory loopholes that allowed it to sell cheaper, compounded versions of in-demand weight-loss drugs like Wegovy and Zepbound. With brand-name shortages largely resolved, the firm is shifting its attention to longer-term strategic investments.
“While not easy, this step reflects our commitment to invest in the areas that will define our future,” a spokesperson for the company said in a statement provided to Bloomberg. “As part of this broader change, we will continue to actively hire for roles critical to our long-term strategy.”
The news was first disclosed in Emily Sundberg’s business newsletter Feed Me, following months of speculation about how telehealth platforms would adapt as the market for weight-loss drugs stabilizes. Hims had quickly become a key player by offering lower-cost alternatives when supply constraints propelled demand for off-brand equivalents.
The company’s valuation has soared, with its market capitalization reaching $12.7 billion as of its latest earnings report. This rapid growth was largely fueled by sales of compound versions of high-profile medications, capitalizing on temporary shortages that opened a window for telehealth platforms to scale.
To sustain momentum, Hims recently announced a deal with Novo Nordisk A/S (NYSE:NVO) to distribute branded Wegovy at discounted rates. That partnership marks a notable departure from the firm’s earlier reliance on generics and compounded imitators, indicating a move toward legitimizing its pharmaceutical offerings through strategic alliances.
Industry watchers suggest the strategy may help the firm navigate rising scrutiny from U.S. regulators over compounded drugs and online prescribing practices. While details about which roles will be eliminated were not disclosed, the company affirmed its intention to continue hiring in key growth areas, as it seeks to revolutionize the telehealth industry.
Hims stock rose 7.9% in trade Friday.