WeightWatchers has lengthy been a family title, boosted by celeb endorsements from Oprah Winfrey and Jennifer Hudson. Jean Nidetch based the New York Metropolis firm in her condo within the early Sixties, and grew it to serve greater than 4 million members worldwide. From these humble roots, the corporate developed to serving to folks monitor their meals by way of an app and provide dwell teaching and group assist. Extra lately, it shifted to scientific assist by buying telehealth firm Sequence, which permits it to supply weight-loss medicine.
However final week, WeightWatchers filed for Chapter 11 chapter in a bid to eradicate $1.15 billion in debt from the corporate’s steadiness sheet.
Why?
“The underside line is that their model and 60-year historical past is the poster youngster for what the brand new gamers are rejecting out there, and there may be solely a lot they will do to repair that,” mentioned Michael Schnell, a director in well being guide West Monroe’s healthcare M&A gaggle. “That is like Blockbuster attempting to catch Netflix by entering into streaming – shoppers have moved on, and it’s arduous to vary a long time of market notion.”
In different phrases, it couldn’t adapt quick sufficient to a quickly altering weight-loss atmosphere spurred by the rising reputation of GLP-1s.
What led to this?
A spokesperson for WeightWatchers mentioned the corporate’s crushing debt, in addition to the $100 million it pays yearly in curiosity expense, reduces its capacity to put money into the enterprise, significantly its telehealth and scientific enterprise that helps these taking GLP-1s.
“WeightWatchers’ debt burden was not the direct results of current operational or monetary efficiency, however largely the results of strategic monetary selections,” the spokesperson mentioned. “Latest modifications in WeightWatchers’ efficiency—compounded by the Covid-19 disaster and the appearance of GLP-1 medicines—disrupted forecasting for the corporate and our monetary image, which impacted our capacity to repay our debt below the beforehand agreed upon phrases.”
The spokesperson famous that submitting for chapter will cut back the monetary burden thereby releasing up the corporate to put money into the enterprise.
However a greater monetary footing could not totally flip round WeightWatchers’ fortunes.
A serious problem for the corporate has been transitioning to a altering tradition round weight reduction, in keeping with Schnell. Though the corporate provides an app, digital assist and entry to GLP-1s, it’s nonetheless seen as a conventional weight-loss firm.
“WeightWatcher’s legacy mannequin — centered on in-person workshops, publicly weighing your self, a points-based system, and storefronts — counters present market traits,” Schnell mentioned. “Customers need personal, digital-first, affirming wellness experiences which are in themselves a rejection of ‘food regimen tradition.’ WW couldn’t adapt quick sufficient to shifting buyer expectations—its model represented exactly what the brand new market was abandoning.”
Schnell added that GLP-1s disrupted the weight-loss market profoundly and that WeightWatchers’ try and pivot was a “basic case of the innovator’s dilemma.” Digital-first manufacturers like Hims & Hers and Ro have been in a position to shift to GLP-1s and “wellness-focused language” extra rapidly, in contrast to legacy manufacturers.
One other healthcare skilled echoed these feedback. WeightWatchers’ model is related to conduct change assist, similar to meal and health monitoring, and never a lot as a scientific care supply service that prescribes medicines, defined Ian Chiang, accomplice at Flare Capital Companions.
Retaining members can be a big problem for WeightWatchers “given the episodic nature of their program,” Chiang added. Plus in relation to prescribing GLP-1s, it’s arduous to compete with the entire different direct-to-consumer corporations like Hims & Hers and Ro, in addition to extra clinically-focused corporations. This contains Knownwell, which is considered one of Flare Capital Associate’s portfolio corporations.
Additional, Oprah Winfrey leaving the WeightWatchers board in 2024 and utilizing GLP-1s was a “cultural nail within the coffin,” Schnell mentioned.
“When your iconic spokesperson makes use of GLP-1s and leaves your board, it’s like your star participant switching groups,” he argued.
An govt for a weight reduction and diabetes firm, in the meantime, argued that WeightWatchers’ program merely doesn’t work.
“A system that counts energy and takes an ‘eat much less, train extra’ method doesn’t work to ship sustained weight reduction, and by no means has,” declared Sami Inkinen, CEO and co-founder of Virta Well being. “Virtually, sure, they’d an excessive amount of debt to have the ability to service it with incoming money circulate and therefore the chapter now. However it’s the elemental downside — that this system doesn’t work — that’s actually plagued the corporate.”
Virta Well being, in the meantime, works with payers and employers and provides a “nutrition-first method” with the power to prescribe medicines if wanted, in keeping with Inkinen.
The WeightWatchers spokesperson famous that the corporate has greater than 180 research and dozens of scientific trials demonstrating its method. The randomized managed trials present “that our members lose a clinically important quantity of weight, whereas additionally enhancing total food regimen high quality and lowering disordered consuming behaviors. Our evidence-based method ensures that members are supported not simply in losing a few pounds, however in constructing more healthy, extra sustainable consuming habits.”
What does the chapter bode for different weight reduction corporations?
Jenny Craig, considered one of WeightWatchers’ direct opponents, has struggled with its personal monetary issues. In the end, the corporate shut down in 2023 after greater than 40 years in enterprise, partially on account of rising demand for GLP-1s, CNN reported. It was later rebooted by well being and wellness firm Wellful, however purely with a web based presence as its weight reduction facilities weren’t reopened.
The destiny of Jenny Craig and WeightWatchers isn’t essentially consultant of the newer technology of tech-enabled weight reduction corporations.
Take Noom, for instance, that began with conduct change assist and shifted to additionally providing scientific care. The corporate takes a behavioral science method to weight reduction, providing an app and training assets. It additionally supplies entry to weight reduction medicines for individuals who want it. The corporate’s CEO, Geoff Cook dinner, instructed MedCity Information that it has no debt and has been worthwhile for plenty of years.
He mentioned a distinction could possibly be that WeightWatchers transitioned into scientific care by buying Sequence, whereas Noom constructed its scientific program. This allowed Noom to be extra nimble when creating this system.
Schnell famous that the nearer an organization’s model is to the “conventional, discipline-focused mannequin, the harder the shift [to clinical care] shall be.” Noom is best positioned than WeightWatchers as a result of it’s centered on psychology versus counting energy, he mentioned.
“Nonetheless, they may all the time be much less pure-play than the zero-friction D2C manufacturers like Hims and Ro,” he added.
Chiang, in the meantime, emphasised that “prescription-as-a-service” corporations that target episodic care like weight reduction, similar to WeightWatchers, will all the time battle with affected person retention. With a view to succeed, these sorts of corporations “want to start out determining truly ship the best high quality, evidence-based scientific care, after which additionally to have the ability to construct a model that the affected person can belief.”
Knownwell, which provides weight administration providers alongside main care, does this very properly and that, in flip, boosts affected person loyalty, he identified.
Wanting forward, WeightWatchers plans to “preserve evolving alongside science and client wants—providing a holistic, customized expertise that blends medical care, behavioral assist, and group connection,” the spokesperson mentioned. “Because the market grows, significantly round GLP-1s and different scientific interventions, we’re dedicated to increasing our providers to assist members by way of each section of their well being journey.”
Photograph: santima.studio, Getty Photos
