WeightWatchers Takes a Leap into Bankruptcy Amid Weight-Loss Drug Boom
Diet company WeightWatchers files for bankruptcy, as public shifts towards weight-loss medications such as Ozempic and Mounjaro.
WeightWatchers, the aged weight-loss giant, has stumbled into bankruptcy filing under Chapter 11 in the US. This move comes amid the rise of weight-loss drugs like Ozempic and Mounjaro.
Based in New York, WeightWatchers, founded back in 1963, has been a long-time beacon for millions seeking to shed pounds through memberships, meals, books, and workshops. The company has had its fair share of celebrity supporters, such as Oprah Winfrey, Lorraine Kelly, and Jessica Simpson to name a few.
With nearly three-quarters of its creditors showing support, the company is ready to march forward with the bankruptcy proceedings. WeightWatchers hopes to reemerge within 45 days, if not sooner, and transform its operations into a telehealth services provider, with a keen focus on weight-loss drugs.
The company plans to eliminate its burdensome $1.15 billion debt through the bankruptcy process. The debt burden had been a significant strain, costing the company almost $100 million annually in interest in the past two years.
The unprecedented success and popularity of weight-loss drugs have hindered WeightWatchers’ business model, which relied heavily on selling low-calorie foods and diet advice. A new wave of consumers are turning to these drugs to lose weight more effortlessly.
WeightWatchers threw its hat into the prescription weight-loss drug arena in 2023, acquiring Sequence for $105 million. Now known as WeightWatchers Clinic, this telehealth service aids users in obtaining prescriptions for weight-loss drugs like Ozempic, Trulicity, and Wegovy.
Amid WeightWatchers' tumultuous ride, Sima Sistani stepped down as the CEO of WW International in September 2024. Tara Comonte, a former Shake Shack executive and Weight Watchers board member, was named the group's interim CEO.
On Tuesday, Comonte, now the CEO, stated, "As the weight conversation shifts towards long-term health, our commitment to delivering the most trusted, science-backed, and holistic solutions—rooted in community support and lasting results—has never been stronger or more important."
In the first quarter, WeightWatchers' weight-loss medication and clinical subscriptions arm witnessed revenue surge 57% year-on-year to $29.5 million. However, WeightWatchers' overall revenue dropped 10% during the same period while its adjusted loss reached 47 cents per share.
WeightWatchers' shares have traded below $1 since early February. After-hours trading saw the stock tumble by half to 39 cents. The company's market value stood at around $11.6 million last month, a significant decline from its $6.7 billion peak. By contrast, Ozempic-maker Novo Nordisk is valued at $2.6 trillion.
Alarm bells were first ringing in March 2023 as the company's shares hit an all-time low amid dwindling sales. The situation worsened when long-time investor Winfrey, who admitted to using weight-loss medication, stepped down from the group's board in February 2024 after nearly a decade in the role.
Lale Akoner, a global market analyst at eToro, opines, "The rise of GLP-1 drugs has upended the traditional weight-loss industry, and WeightWatchers is the first major casualty. Its bankruptcy is less about mismanagement and more about becoming irrelevant. The company failed to pivot quickly enough in a market that now prefers prescriptions over points. Legacy diet brands are being outpaced by a pharma-driven approach that consumers increasingly trust. WeightWatchers’ downfall highlights a seismic shift: Americans are moving away from old-school diet programs and embracing medical interventions."
- Despite the weight-loss drug boom and the emergence of competitors, WeightWatchers, known for its long-time focus on weight-loss, has filed for bankruptcy.
- In the midst of this financial turmoil, WeightWatchers, headquartered in New York, aims to resurface within 45 days as a telehealth services provider with a focus on weight-loss drugs.
- To streamline its operations, WeightWatchers plans to eliminate its over $1 billion debt accrued through bankruptcy, a burden that was costing the company millions in interest annually.
- The success and popularity of weight-loss drugs have impacted WeightWatchers' business model, which relied on selling low-calorie foods and diet advice, resulting in a shift towards prescription drugs like Ozempic and Mounjaro.
- Beyond its turnaround plan, WeightWatchers has already ventured into the prescription weight-loss drug arena, adding an arm focused on telehealth services, which aids users in obtaining prescriptions for such treatments.
- In the face of these challenges, WeightWatchers, a former diet and weight-management industry titan, now grapples with a significant decline in market value, dwindling sales, and a shift in customer preference towards medical interventions for weight management.
