A Habit Worthy of Two Lawsuits

Most businesses eventually build something that only works because most people don't look closely. That mechanism continues to run until the fallout costs more than the practice captures.

The auto-renewal that outlives the reason someone signed up gains you one more revenue cycle. The terms and conditions checkbox nobody reads fuels your growth strategy, so that data-sharing clause lets you route customer information to ad platforms. None of it is inherently wrong. It becomes a problem the moment someone does look closely, and the practice doesn't hold up to the explanation.

The response afterward matters more than getting caught. Fix what was called into question, or defend the choices. A fast-growing consumer health company has made the same choice eighteen months apart.

In May 2024, Hims & Hers started selling its own low-cost copy of semaglutide, the GLP-1 weight-loss drug sold under the brand names Ozempic and Wegovy. It could do that because of one narrow rule: when a brand-name drug is officially in short supply, federal law lets pharmacies compound and sell their own version of it, and semaglutide had been in shortage for two years.

In February 2025, Hims & Hers ran a Super Bowl ad, set to Childish Gambino's "This Is America," that calls obesity America's deadliest epidemic and points viewers toward its own affordable alternative; traffic to the site surges in the hours after the spot airs, and lawmakers send letters asking whether the ad misled patients.

Twelve days later, the rule the entire business line depended on expired: the FDA declared the shortage over, with cutoff dates a few weeks out. Hims & Hers kept pushing.

In April 2025 it cut a deal to sell the real, brand-name drug through Novo Nordisk instead of compounding a copy. On June 23, 2025, Novo tore the deal up, publicly accusing Hims & Hers of "illegal mass compounding and deceptive marketing" and of selling knockoffs "under the false guise of 'personalization.'"

Hims & Hers stock fell roughly 34% in a single day, and shareholder lawsuits followed. CEO Andrew Dudum answered on X that his company would not "be strong-armed by any pharmaceutical company's anticompetitive demands."

Then, in February 2026, Hims & Hers launched a copycat weight-loss pill, this time compounding a version of a drug no longer in shortage. Novo sued for patent infringement, and a senior federal health official referred the company to the Department of Justice. Within weeks the fight was over: in March, the company Dudum co-founded announced a "Strategic Shift," agreeing to stop selling its own copies and offer Novo's branded products instead, and Novo dropped the suit.

The bill for this strategic fumble landed in the next earnings report: a $92 million quarterly loss that included write-downs on compounding inventory Hims & Hers could no longer use. Even so, revenue kept growing, and the damage from the first fight stayed contained to one business line.

On July 29, 2026, that containment ran out. The FTC sued Hims & Hers, alleging the company shared customers' health information with third-party ad platforms, despite telling patients their information stayed private. The complaint also alleges Hims & Hers charged and enrolled patients in recurring prescriptions almost immediately after they submitted intake forms, before a provider had reviewed the request, then routed cancellation requests toward a subscription-management screen that never uses the word "cancel."

Hims & Hers called the allegations "baseless," said the case disregards the evidence it gave the FTC during its "nearly three-year investigation," and vowed to fight it, the same defensive posture it had taken against Novo Nordisk. Shares fell 10% that day.

Capturing the transient advantage and riding a series of short-term successes is a viable business strategy. But Hims & Hers didn’t have their next strategy developed before the current wave was cresting. After spending $16 million on a Super Bowl commercial, only to get a notification twelve days later that the advantage was expiring, they chose to stay the course. That’s Strategy defining the game to play while Market is sounding alarm bells that the rules have changed.

The methods deployed to capture market share were called into question numerous times. It revealed more friction in Execution. The FTC's complaint traces cancellation hurdles back to at least 2019. The complaint also alleges the company kept sharing customers' health data with advertising platforms for years while its own terms page ensured privacy.

Mindset deficiency is influencing both cases. When Novo Nordisk called the compounding business illegal, Hims & Hers disputed it and pushed further before settling on Novo's terms months later. When the FTC called the billing and privacy practices deceptive, the company again vowed to fight. The fixed identity trap makes strategic pivots difficult.

Two different accusers, months apart, reached the same conclusion: something in how the company treated customers didn't match what it told them.

There are dozens of small decisions running in your business. The instinct to defend what you built is natural. Even if thoughtful consideration went into the current practice, it still deserves pausing to rethink the strategy when customers start raising questions.

You can spend time defending the questionable practice or spend time fixing it. The Market response will tell you which choice was the correct one. Finance will show the ultimate cost of that decision. Your brand reputation can’t afford to adopt a defensive posture.

The Vital6 Assessment reveals friction in your business so you can choose differently before an outside force chooses for you.

Want to go deep on the Vital6? I wrote a book about it.