Tarsus Pharmaceuticals Stock Drops as Short Seller Alleges Illegal Copay Scheme

Tarsus Pharmaceuticals Inc (NASDAQ: TARS ) shares are falling Wednesday.

Short-seller Culper Research published a report claiming the company’s sole commercial product relies on an alleged illegal Medicare copay scheme.

Here’s what you should know.

Tarsus Pharmaceuticals stock is feeling bearish pressure.

What’s pressuring TARS stock? Culper alleges the company’s addressable market is a fraction of what management says and that 2026 profit estimates are wildly inflated.

Culper notes that it is short the stock.

Tarsus Pharmaceuticals did not immediately respond to ’s request for comment.

The Alleged Medicare Copay Scheme Culper alleges Tarsus has driven XDEMVY sales by channeling donations to a blepharitis fund operated by the Healthwell Foundation to cover Medicare patient copays, a practice the firm says runs afoul of the Anti-Kickback Statute.

Working from Tarsus’s own tax filings, Culper estimates the company donated $5.7 million in 2023, $31.2 million in 2024 and $78.5 million in 2025 to the fund, amounts that closely track the foundation’s own disclosed donation totals.

Culper also alleges that the fund’s grants flow almost entirely to XDEMVY patients, and that Tarsus funnels Medicare patients toward the fund through its concentrated relationship with specialty pharmacy BlinkRx.

A Disputed Addressable Market Culper alleges Tarsus’s stated 25 million potential patients, which backs management’s $2 billion peak revenue target, is built on flawed science.

A Culper survey of 30 active XDEMVY prescribers found only 18% of their patients carried the diagnosis.

Tarsus itself has said just 1.5 million Americans have ever been diagnosed with the condition.

With more than 600,000 already treated, Culper sees revenues topping out below $800 million in 2028, a view it argues is supported by Blackstone’s May 2025 acquisition of the XDEMVY royalty stream from Elanco for $295 million, which the firm says implies peak revenues of $712 million to $1.28 billion.

Profits Under Pressure Culper argues 2026 earnings estimates are also at risk because Wall Street is modeling the company’s cost base as though it is largely fixed when the data suggest otherwise.

In the first quarter of 2026, selling and administrative expenses climbed to 94% of revenues even as sales dropped sequentially.

If that ratio holds for the full year, Culper estimates the company posts EBIT of negative $130 million.

The short seller added that company insiders have sold $17 million worth of stock over the past year.

TARS Shares Are Dropping TARS Price Action: Tarsus shares were down 4.50% at $60.11 at the time of publication on Wednesday, according to Pro.

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