Tarsus Pharmaceuticals shares fell on Wednesday after short-seller Culper Research published a report alleging the company’s sole commercial product relies on an illegal Medicare copay scheme. The report claims the company's addressable market is a fraction of what management states and that 2026 profit estimates are wildly inflated. Culper noted that it is short the stock. Tarsus Pharmaceuticals did not immediately respond to a 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 violates the Anti-Kickback Statute. Working from Tarsus’s 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. These amounts 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 supports management’s $2 billion peak revenue target, is based on flawed science. A survey of 30 active XDEMVY prescribers found only 18% of their patients carried the diagnosis. Tarsus has stated that 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. This view is supported by Blackstone’s May 2025 acquisition of the XDEMVY royalty stream from Elanco for $295 million, which implies peak revenues of $712 million to $1.28 billion.

Profits Under Pressure

Culper argues 2026 earnings estimates are at risk because Wall Street is modeling the company’s cost base as largely fixed when 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 report added that company insiders have sold $17 million worth of stock over the past year.

Financial Impact and Stock Performance

The allegations have impacted Tarsus Pharmaceuticals' stock performance. The following table details the alleged donations and financial projections mentioned in the report.

Tarsus shares were down 4.50% at $60.11 at the time of publication on Wednesday.