WeightWatchers Files Bankruptcy After Growth in GLP-1 Drugs
(Bloomberg) -- WeightWatchers, known for its diet programs once endorsed by celebrities including Oprah Winfrey, has filed for bankruptcy after struggling to compete with drugs like Ozempic and the rise of TikTok fitness influencers.
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The company — which rebranded to WW International Inc. — filed a prepackaged Chapter 11 petition to execute a lender-backed plan that would cut about $1.15 billion in debt from its balance sheet. It expects to complete the reorganization in about 45 days.
WeightWatchers said the restructuring plan will 'significantly reduce' its debt obligations. The proposed restructuring must be approved by a bankruptcy judge.
WeightWatchers tried to ride the weight-loss drugs wave by offering a few on its platform, but found it challenging to convince clients that its programs were still worth their time. The company has also been grappling with annual interest expenses of over $100 million, which has limited its ability to invest in growth initiatives and marketing, according to court filings.
The company has also struggled with the growth of free or low-cost fitness-related social media content and diet-based smartphone apps. WeightWatchers Chief Financial Officer Felicia DellaFortuna said in a court filing that consumers are increasingly 'rejecting traditional weight-loss narratives' and flocking to do-it-yourself weight-loss apps.
The shift has been fueled by influencers who share their personal success stories and offer fitness advice to their followers on Instagram, YouTube and TikTok, DellaFortuna said.
The company is seeking court protection in Delaware after Bloomberg News reported last month that it was preparing to file in the coming weeks following a debt-restructuring agreement with the majority of its lenders.
Prepackaged Plan
Prepackaged bankruptcies generally allow companies to exit Chapter 11 quickly and without disruption to their business or unsecured creditors.
WeightWatchers said the restructuring plan would retain $175 million previously drawn by the company from its revolving credit facility and reduce its annual interest expense by about $50 million. The plan envisages the reorganized company issuing $465 million in new term loans and notes, which will mature five years from the effective date of the restructuring, filings said.
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