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Telehealth Gains as Employers Ditch Weight-Loss Drug Coverage
25 Jun
Summary
- Employers plan to withdraw coverage for weight-loss drugs starting in 2027.
- This shift is expected to drive patients to direct-to-consumer telehealth platforms.
- Hims & Hers' weight-loss division already contributes significantly to its revenue.
Starting in 2027, employers are beginning to withdraw coverage for popular weight-loss medications due to soaring costs. This decision will impact treatments like Novo Nordisk's Wegovy and Eli Lilly's Zepbound. Industry experts anticipate this change will redirect individuals towards direct-to-consumer telehealth platforms, including Hims & Hers' subscription services. These platforms offer bundled virtual consultations and facilitate access to necessary medicines.
Hims & Hers is expected to benefit from this evolving healthcare landscape. Approximately one-third of the company's current revenue comes from its expanding weight-loss division. Analysts project this ratio to increase as the US market shifts away from reliance on insurance for weight-loss solutions. While employer-based plans remain prevalent, a notable percentage of employers plan to discontinue GLP-1 drug coverage for weight loss by 2027.
The company has established itself as a major U.S. telehealth provider for weight-loss drugs. In March, Hims & Hers partnered with Novo Nordisk for branded drugs and continues to offer compounded versions. This collaboration has significantly boosted Novo Nordisk's telehealth partner volume. Analysts are observing Hims & Hers' subscriber growth, noting that the majority of its revenue comes from auto-renewed subscriptions, with a high renewal rate for weight-loss subscribers.
