WeightWatchers files for bankruptcy protection as weight-loss drugs dominate
Popular weight-loss drugs like Ozempic and Wegovy are helping millions worldwide shed unwanted pounds, but it appears they've also been eating away at WeightWatcher's profits.
WW International, formerly known as WeightWatchers, filed for Chapter 11 bankruptcy protection on Tuesday in a bid to protect itself and cut debt after hugely popular obesity drugs capsized its once successful business model.
It hopes to eliminate debts of more than US$1.1 billion while positioning the 'company for long-term growth and success.' The type of bankruptcy allows the company to continue operating while it restructures its assets and fights to continue operating.
The company has accumulated substantial debt of around $1.6 billion.
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WeightWatchers said it will remain 'fully operational' during the process with 'no impact to members.'
WeightWatchers formed more than 60 years ago, starting out by offering weekly weight-loss support group meetings. The first meeting, which cost New Yorkers $2 to attend, attracted 400 people looking to lose weight.
A year later, the company began to offer a franchise option and, soon after, WeightWatchers transformed into a household name with millions of members around the globe.
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Weight Watchers drops 'weight' from its name
The rising combination of fitness influencers and popularity of GLP-1 drugs, such as Novo Nordisk's Ozempic and Wegovy, are now a major threat to traditional weight-loss programs.
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During Tuesday's first quarter results, WW International revealed that subscribers were down more than 14 per cent compared to the same period last year, at 3.4 million. Revenues of nearly $187 million plunged almost 10 per cent compared with the year prior.
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The company is due to be taken over by a group of investors, while shareholders will retain a nine per cent stake once the process is complete in 45 days, per the filing.
Shares of the company, which once boasted Oprah Winfrey as one of its top shareholders and a member of the board of directors, have traded at under $1 since early February.
In after-hours trading on Tuesday, the stock plunged by half, to 39 cents.
Winfrey left the WW board of directors in February 2024 after she told People magazine that she had been taking weight-loss drugs, the company said at the time.
Winfrey, the company's largest individual shareholder at the time, pledged to donate her stake to the National Museum of African American History and Culture in Washington, D.C.
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FILE – Oprah Winfrey announced her exit from the WeightWatchers board of directors on Feb. 28, 2024. John Salangsang/Golden Globes 2024/Golden Globes 2024 via Getty Images
In 2023, the company moved into the prescription drug weight loss business — particularly with the $106 million acquisition of Sequence, now WeightWatchers Clinic, a telehealth service that helps users get prescriptions for drugs like Ozempic, Wegovy and Trulicity.
Its latest earnings report Tuesday shared that its clinical subscription revenue — or weight-loss medications — jumped 57 per cent year-over-year to $29.5 million.
The company has estimated assets and liabilities in the range of $1 billion to $10 billion, according to the petition filed in Delaware bankruptcy court.
— With files from The Associated Press
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