Andrew Dudum went on CNBC to explain that the FTC doesn't understand Hims & Hers. The FTC filed a lawsuit. Dudum thinks this is a misunderstanding. The FTC thinks it's a violation of consumer protection laws. One of these groups has subpoena power.
The company sells compounded GLP-1 drugs. These are the weight loss medications everyone wants but can't afford. Hims & Hers found a workaround using compounding pharmacies. The FTC noticed. Dudum is shocked that noticing happened.
He also talked about AI during the interview because of course he did. Nothing says "we're a legitimate healthcare company" like pivoting to artificial intelligence while discussing a federal lawsuit about drug compounding. The man contains multitudes. The multitudes contain buzzwords.
Compounded drugs exist in a regulatory gray area. They're supposed to fill gaps when FDA-approved drugs are in shortage. Hims & Hers turned that into a business model. The FTC read the same rules and arrived at a different conclusion. Dudum believes his interpretation is correct. The FTC has lawyers who went to law school for this specific purpose.
Retail traders saw the lawsuit news and bought the dip. They always buy the dip. A federal regulatory agency could announce criminal charges and someone would post "generational buying opportunity" on Reddit. These are the same people who think a CEO going on television to say "you don't understand" is bullish.
The stock dropped after the lawsuit. It recovered some losses after Dudum's interview. Investors heard a man say the government is wrong about his company and thought yes, this inspires confidence. The government has a 99% conviction rate in cases it chooses to pursue, but sure, maybe they're confused about how telehealth works.
Dudum's entire defense is that the FTC misunderstands the business. The FTC's entire lawsuit suggests they understand it perfectly.
Photo by Bashar Alkhouli on Unsplash
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