Hims & Hers Health shares experienced a significant decline on Wednesday following a lawsuit filed by the Federal Trade Commission (FTC). The regulatory body alleges the telehealth company misled consumers regarding its privacy protections, billing practices, and subscription cancellation processes.

The FTC, in collaboration with Los Angeles County and the state of Utah, filed the complaint. It accuses Hims & Hers of using tracking technologies embedded on its website to share sensitive user health information with online advertising platforms, including Meta Platforms and Snap. The agency stated that these actions contradict the company's public commitments to safeguarding user health data.

The FTC further alleges that Hims & Hers charged customers for prescription medications before they had communicated with a healthcare provider. According to the agency, many clients were billed after completing an intake form, rather than following a consultation with a medical professional. Regulators also claim the company made it difficult for users to cancel their subscriptions.

Hims & Hers denied the allegations on the X platform, stating the lawsuit "ignores the substantial evidence provided during the nearly three-year FTC investigation" and "misinterprets the law in an attempt to fabricate claims." The company expressed confidence in its position and stated it would "vigorously defend itself."

This legal action comes as Hims & Hers has become one of the largest telehealth providers in the rapidly growing weight-loss drug market. The company offers virtual consultations and prescription services for treatments including weight loss medications, erectile dysfunction, hair loss, and mental health drugs, with medications shipped directly to consumers.

The FTC's investigation dates back to October 2023. Prior reports had detailed multiple inquiries into Hims & Hers business practices, including its Super Bowl advertisement and compounded weight-loss drugs. In April, the FTC formally notified the company of the findings from the investigation launched in 2023 and began settlement negotiations. In May, Hims & Hers disclosed a potential loss accrual of $15 million related to the matter, warning that the final costs could be significantly higher. The company stated it had proposed a settlement without admitting fault. Wednesday's lawsuit escalates the dispute, introducing new allegations from the regulator.