WeightWatchers, now operating as WW International Inc., has filed for Chapter 11 bankruptcy protection in the United States, a move driven by mounting debt and intensifying competition from a new generation of weight-loss drugs like Ozempic and Wegovy. The company, a fixture in the American wellness landscape for over six decades, is seeking to eliminate $1.15 billion in debt and restructure its operations, aiming to emerge as a more focused telehealth provider.
The bankruptcy filing, made in U.S. Bankruptcy Court for the District of Delaware, comes as the weight-loss market undergoes a significant transformation. The rise in popularity of glucagon-like peptide-1 (GLP-1) receptor agonists, such as Ozempic, Wegovy and Mounjaro, has disrupted traditional weight-loss programs, including those offered by WeightWatchers. While WeightWatchers has attempted to adapt by entering the prescription drug weight-loss business – acquiring Sequence in – the shift has not been enough to offset the broader challenges.
According to a company statement, WeightWatchers intends to continue operating fully throughout the bankruptcy process, with no anticipated impact on its members. The company’s weight-loss program, telehealth services, and workshops are all expected to remain available. The plan has the support of approximately three-quarters of its debt holders, suggesting a relatively smooth restructuring process is anticipated.
The financial pressures on WeightWatchers have been building for some time. First-quarter revenue recently declined by 10 percent, with an adjusted loss of 47 cents per share. However, clinical subscription revenue – representing revenue from weight-loss medications – saw a substantial increase of 57 percent year-over-year, reaching $29.5 million. This highlights the company’s attempt to pivot towards a pharmaceutical-supported model, but also underscores the financial strain elsewhere in the business.
The leadership at WeightWatchers has also seen recent changes. Sima Sistani resigned as CEO in September, and Tara Comonte, a board member and former executive at Shake Shack, was appointed interim CEO, and subsequently CEO. Comonte emphasized the company’s commitment to delivering “science-backed, and holistic solutions” in a statement released alongside the bankruptcy announcement. She framed the restructuring as a necessary step to position WeightWatchers for long-term success in a changing market.
The bankruptcy filing follows a period of increased scrutiny surrounding the weight-loss drug business. Hims & Hers Health, Inc., another player in the telehealth and weight-loss drug market, is facing legal challenges from Novo Nordisk, the manufacturer of Wegovy. Novo Nordisk has filed a lawsuit alleging that Hims & Hers is offering a compounded version of Wegovy without proper authorization, potentially infringing on intellectual property and raising safety concerns. This legal battle underscores the complexities and regulatory hurdles within the rapidly expanding weight-loss drug landscape.
WeightWatchers’ struggles are not unique. The company’s trajectory reflects a broader trend impacting the wellness industry. The convenience and efficacy of GLP-1 drugs have attracted a significant customer base, challenging the traditional methods promoted by companies like WeightWatchers. The shift towards pharmaceutical interventions for weight loss has forced established players to reassess their business models and explore new avenues for growth.
The company’s shares have been trading below $1 since early February , and plunged by 50 percent in after-hours trading following the bankruptcy announcement, closing at 39 cents. This reflects investor concerns about the company’s future prospects and the challenges it faces in navigating the evolving weight-loss market.
WeightWatchers’ restructuring plan aims to eliminate its substantial debt, some of which dates back decades, and allow it to focus on its telehealth offerings. The company believes this strategic shift will enable it to capitalize on the growing demand for accessible and personalized weight-loss solutions. However, the success of this plan will depend on its ability to effectively compete with established pharmaceutical companies and other telehealth providers in a rapidly changing market.
The bankruptcy filing is a significant moment for a company that has been a cultural touchstone for generations. Founded over 60 years ago as a weekly weight-loss support group, WeightWatchers expanded to become a global brand. Its ability to adapt and remain relevant in the face of new challenges will be closely watched by industry observers and investors alike.
