Hims & Hers Health (NYSE:HIMS) stock is taking a tumble after Hunterbrook Media released a short report on the telehealth company.

Hunterbrook operates an interesting business model, as it publishes research on stocks through Hunterbrook Media while sometimes taking a position in the same stock through its hedge fund affiliate, Hunterbrook Capital. In this instance, the hedge fund has disclosed that it is short HIMS stock.

The premise of Hunterbrook’s short report lies on Hims’ compounded GLP-1 weight-loss drug. Since there is currently a GLP-1 shortage, U.S. pharmacies are able to make copies of the drug with slight tweaks. However, these drugs are not approved by the U.S. Food and Drug Administration (FDA). Hims announced on May 20 that it would begin providing a compounded GLP-1 drug.

Hunterbrook takes issue with Hims’ GLP-1 supplier, BPI Labs, which is owned by Belcher Pharmaceuticals. Through its investigation, the media company found out that two Belcher executives received prison time for a healthcare fraud scheme.

“One of these convicted fraudsters, Mihir Taneja, pleaded guilty on November 30, 2020, to ‘introduction of misbranded drugs into interstate commerce with the intent to defraud and mislead,'” wrote Hunterbrook. In response, a Belcher spokesperson stated that Taneja’s scheme was unrelated to the company and that he has not been associated with Belcher during the past five years.

HIMS Stock: Hunterbrook Capital Discloses a Short Position

In the report, Hunterbrook also discusses the accessibility and safety of compounded GLP-1 drugs. Without speaking to a doctor, a Hunterbrook reporter was able to order the Hims weight-loss drug after completing a four-minute survey.

Obesity doctor and founding CEO of twenty30 health Dr. Rajesh Aggarwal believes that compounded GLP-1 drugs carry more risks than are communicated. Additionally, former director of the Massachusetts General Hospital Weight Center Dr. Angela Fitch characterized the compounded GLP-1 industry as “the largest uncontrolled, unconsented human experiment of our lifetime.”

On top of the health and safety risks, Hims could be setting itself up for legal trouble as well. Hunterbrook interviewed a FDA legal expert who echoed this concern in the event that compounded GLP-1 drugs violate a Big Pharma patent or are proven to be unsafe or ineffective.

Finally, Hunterbrook points out that insiders have sold more than 1.7 million shares of HIMS stock since the compounded GLP-1 announcement, collecting $26.4 million of net proceeds in the process.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.