HIms & Hers shares rise premarket on upcoming inclusion in S&P SmallCap 600

Investing.com -- Shares in Hims Hers Health  (NYSE:HIMS ) jumped by more than 6% in premarket US trading on Monday on news that the telehealth group is indicated to join the S&P SmallCap 600 , replacing fourth-largest American cigarette maker Vector Group (NYSE:VGR ).

According to a statement from S&P Dow Jones Indices, the change, which comes after Japan Tobacco (OTC:JAPAF ) Group announced in August that it had agreed to acquire Vector for roughly $2.4 billion, is due to take effect prior to the opening of trading on Oct. 9.

Last week, Hims & Hers shares dipped after federal drug regulators said Eli Lilly (NYSE:LLY )'s blockbuster weight-loss and diabetes medications are no longer considered to be in shortage.

Major drug companies, including Eli Lilly and rival Novo Nordisk (NYSE:NVO ), have struggled to keep up with the soaring demand for these medications, which have been shown to help patients lose up to 20% of their weight on average.

Because of this shortage, US regulators have allowed businesses to make compound versions, or close recreations of brand-name medicines.

Hims & Hers is one such compounder, offering an injection of semaglutide -- the key ingredient in Novo Nordisk's popular Wegovy drug -- for $199 per month to patients on a 12-month plan, according to its website. The company said last month that it would begin selling compound versions of Wegovy to patients in certain professions for $99 a month.

However, the Food and Drug Administration has now said that tirzepatide -- the medication Eli Lilly markets as Zepbound for weight loss and Mounjaro for diabetes -- is no longer in short supply in the US, ending a shortage classification it first put in place in 2022.

Analysts at Citi noted that Hims & Hers will not be directly impacted by the FDA's decision because it compounds semaglutide, which remains on the FDA's shortage list.

But they flagged that the announcement constrains Hims & Hers's future total addressable market and "portend[s] a faster-than-anticipated resolution to shortages."

Source: Investing.com